For those intending to purchase a new vessel with boat finance, knowing what could be ahead with interest rates can be extremely helpful. The major boat shows are coming in the next few months – Sanctuary Cove International Boat Show in May and Sydney in August, with many buyers likely already making plans to purchase. The ongoing RBA rate rises can present challenges in estimating what boat finance rates may be later in the year.
Adding to that challenge are the uncertainties mentioned by the RBA in regard to economic indicators on which the Board’s rate decisions are made. These uncertainties were mentioned briefly when the February rate decision was announced and elaborated in greater detail in the minutes of that February RBA Board meeting. This document was posted to the RBA website on 21 February and contains additional information which may provide guidance for buyers planning boat finance.
Minutes of RBA Board February Meeting – Key Points
The minutes are a detailed account of what issues and topics were discuss by Board members. One theme that does stand out is the uncertainties. Uncertainties were noted in regard to how the rate of inflation may fall and the growth rate for the global and Australian economy.
Other significant comments are around what options the Board discussed in regard to the February rate decision. These are important as they may provide greater insight into what could be ahead. Those that have been following RBA announcements in the media of late, may recall the options discussed at the Board’s December meeting.
The options discussed were not included in the decision announcement but were included in the minutes which were released a few weeks after the meeting. It was revealed that the Board discussed the arguments for and against 3 options at that meeting – leave rates on hold, increase by 0.5% and remain consistent with a 0.25% increase. The latter seen as the appropriate course of action.
Following that meeting, RBA Governor, Dr Philip Lowe, backed up those remarks by saying on a number of occasions that all options were on the table. Moving forward to February and was that ‘on hold’ option discussed? According to the minutes, no.
The Board considered the arguments for a 0.5% increase and a 0.25% increase. As most will be well aware, the 0.25% arguments presented the strongest case and this was the decision.
According to the minutes, the arguments for this decision covered that the rate of inflation appeared to have peaked. But uncertainties were noted in the outlook including a softening in demand and headline inflation was at a lower rate than expected. Scenarios were seen as credible for the position that the level of demand was less than expected.
It was also agreed that further interest rate increases would likely be required in the coming months. As has been consistently mentioned, in making its decisions, the Board will continue to evaluate the developments in the global economy along with consumption and unemployment as well as the behaviour of firms in regard to price-setting and the costs of labour.
Inflation can also be a critical issue for those planning major purchases such as a vessel with boat finance. In regard to that rate, the Board does expect it to fall but the risk exists that the high rate could persist.
It was noted that whether or not inflation had reached a peak based on the data for the December 2022 quarter would not be confirmed for a few months. Uncertainties exist.
One certainty does exist and that is we will know the Board’s next move when it meets on the first Tuesday in March.
Boat Finance Interest Rates
For buyers planning ahead for boat finance, the outlook is pointing towards further RBA rate rises unless some of the ‘uncertainties’ evolve in a more positive direction. Increases to the cash rate announced by the RBA do result in rises in lending rates in many areas including boat financing rates.
Engaging with Jade Boat Loans to source boat finance provides buyers with access to a large number of lenders and the cheapest interest rate loan sourced. We find the lender offering the best rates that match with our customer and the specifics of their loan application.
To assist customers plan further ahead for finance, we provide pre-approved boat loans. Loans can be applied for well advance for the purpose of obtaining a guide to the loan amount which they may be approved for. Closer to the date of ordering, boat finance applications can be processed for an estimated purchase amount so buyers are ready to order.
For general planning purposes and to use as a guide only, customers are welcome to use our online marine loan calculator.
Contact Jade Boat Loans on 1300 000 003 for boat finance at cheaper interest rates.
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 MISPRESENTED DATA AND DETAILS HEREIN.
