Buyers planning to buy a boat with finance should consider how Reserve Bank cash rate decisions may impact boat loan interest rates and overall purchase costs. This could be top of mind for buyers with the new boating season looming and the RBA not ruling out a future rate increase. Timing the purchase to get not only the best price on the watercraft but the lowest boat loan interest rate may be significant.
When financing is required to buy a boat, the loan should be considered in conjunction with selecting the vessel. Buyers may also consider applying for their financing before they make a purchase commitment. If looking ahead to ordering at the November On-water Sydney Boat Show, pre-applying for finance could be something to keep in mind.
To assist buyers who are currently preparing and planning, we provide an update on the latest boat interest rates following the August RBA cash rate decision.
Loans to Buy a Boat
The most popular loan to buy a new boat of all types and sizes is the Secured Boat Loan. This finance product provides buyers with a simple format where the vessel is accepted by the lender as collateral, and the finance is repaid in equal monthly repayments over a fixed term. Our rate on this type of finance is fixed, so it will not change after the finance is settled, even if the RBA or the lender announces a rate change.
But not all lenders offer fixed rate loans to finance boats. Some will have a variable interest rate. This makes the rate and the repayments subject to change if the lender changes their rate on that credit product. Changes typically occur when the RBA announces a change to the cash rate. The result can be either an increase or decrease to the boat loan rate and the monthly repayments.
Second-hand boats may be financed with a secured loan where the lender accepts the vessel as suitable collateral. Rates, loan limits and conditions can vary with new and used boat loans. For very old boats that are not suitable as collateral, an Unsecured Personal Loan may be used as the finance.
While secured and unsecured loans are available across the lending market, there can be variations in the features and conditions of credit products from different lenders. If comparing loans, look beyond the interest rate and at other features such as the maximum and minimum borrowing limits.
RBA Hold - Latest on Boat Loan Interest Rates
If planning to buy later in the year, the next RBA decision may have an impact on the rate you are offered. At its August meeting, the RBA Monetary Policy Board unanimously decided to hold the cash rate at 4.35%. This was what the markets expected. As far as a further increase this year, the markets are reportedly putting the chances of that at 50:50.
While the wording of the August RBA statement may indicate that a further rate increase is possible, the forecasts tend towards that not being necessary. Inflation is expected to be lower than forecast.
The economy is slowing as the housing market weakens and there are still risks, especially with the Middle East crisis impacting fuel prices and inflation. Though in the August Statement, RBA Governor Michele Bullock said the impact of the crisis in the Middle East had so far been less than was expected.
The next cash rate decision is on 29 September. For buyers looking to buy a boat later in the year, that could be a date to watch. The uncertainties that the Bank is concerned about are clearly inflation, domestic economic activity and the Middle East. As the RBA continues to remind us, inflation is still too high and the RBA Board continues to focus on lowering the level to its target range. The next inflation figures are due for release by the ABS on 26 August.
While a hold is welcomed, not all lenders follow the RBA’s decisions; they rely on their own forecasts by their own analysts. In coming months, if the economic data is not as good as hoped and the chances of a rate rise are heightened, lenders may act before the RBA and lift their rates.
Boat loan interest rates are expected to remain steady following the August decision. Is now a good time to source a loan for a boat? While there may be a slight possibility of a rate increase this year, the chances of a rate cut would generally be considered highly unlikely this year. The RBA does not expect inflation to reduce to its target level until late 2027, all but ruling out any rate cuts in the near future.
While rates do vary across the market, buyers can rely on their Jade broker to source their best possible rate from our large lender base. Get estimates on finance to buy a boat at our current interest rates using our Finance Calculator and move from preparing to implementing that boat ownership plan.
To buy a boat with financing at your best boat loan interest rates contact Jade Boat Loans on 1300 000 003.
DISCLAIMER: THE INFORMATION AND SPECIFIC DETAILS CONTAINED IN THE CONTENT OF THIS ARTICLE HAVE BEEN PREPARED AND ARE PRESENTED PURELY AS GENERAL INFORMATION AND NOT INTENDED AS THE ONLY SOURCE OF FINANCIAL ADVICE FOR BOAT BUYERS AND LOAN BORROWERS. FOR THOSE THAT CONSIDER THEY REQUIRE SPECIFIC ADVICE, THEY SHOULD CONSULT WITH A FINANCIAL ADVISOR. LIABILITY IS NOT ACCEPTED IN REGARD TO ERRORS AND MISREPRESENTED DATA AND DETAILS HEREIN.
