When you’re in the market for a new boat with a boat loan, staying across what’s happening with interest rates is sure to be of interest to you. Interest rates are certainly a key focus for our Jade Boat Loans team and for your general information, we bring you this update on rate and broader economic issues.
RBA April Meeting
The RBA (Reserve Bank of Australia) is responsible for setting the official cash rate which is, in basic terms, the interest rate on which lenders base their lending rates as it is the price that they pay to source funds locally. The RBA board meetings monthly to discuss interest rates and at the April 2021 meeting the decision was made to keep rates ‘on hold’ at 0.1%.
On the back of recent comments by RBA Governor, Dr Philip Lowe, this decision was not surprising to the markets. The RBA has not made a move on interest rates since November 2020 when rates were cut by 0.15% to the current 0.1%. However, the decision was also made amidst discussion in some sectors that the RBA should lift rates to cool surging prices in the housing market. A call that Dr Lowe has rejected on a number of occasions recently.
FYI – historic low lending rates and other stimulus measures are attracting more buyers into the housing market which has been driving prices up in some key markets. But Dr Lowe has stated that certain economic indicators need to improve before the RBA will consider a rate increase.
The RBA monthly interest rate decision is released via a statement that provides information on the Board’s reasoning and can provide an insight into future decisions. The April statement noted that despite the global recovery due to the rollout of the COVID-19 vaccines, it is not an even recovery.
Other key points in the statement include:-
- Despite increased global trade and higher commodity prices in the preceding months, the inflation rate was below the level the RBA has targeted as an indicator for a rate increase. The target is 2-3%.
- The economic recovery in Australia was better than forecast based on GDP for December 2020 quarter.
- While showing a downward trend over several months, the unemployment level is too high at present.
- Growth in 2021 and 2022 is expected above the trend.
- Business and household balance sheets appear good and should support spending.
- While a temporary rise in CPI inflation as a result of COVID measures was expected, actual inflation was expected to remain below the targeted 2% in the next few years.
- RBA committed to monetary policy to support the economy.
- No increase in the cash rate would be expected until the targeted 2-3% level of inflation was achieved and sustained. This could be as far out as 2024.
Click here for an overview of key economic indicators for April 2021.
Global Economic Scene
Of interest on the global economic stage was a statement by Gita Gopinath, Chief Economist for the IMF (International Monetary Fund) the day following the RBA’s April rate decision announcement. The IMF delivered a positive forecast of growth for Australia, which mentioned an expansion of 4.5% this year. In January the IMF forecast for Australia’s growth was a 3.5% increase so the April announcement is an upgrade for the outlook.
Despite the Australian economy contracting 2.9% in 2020 due to the pandemic, the upgraded outlook offers positive signals in regard to the country’s recovery. A recovery and bounce back exceeds that of many others.
Boat Loan Interest Rates Update
So what do the RBA decision and Dr Lowe’s expectations of low rates through to possibly 2024 mean for boat loan interest rates? While Jade Boat Loans always offers cheap boat loan interest rates, consumer lending rates, in general, are low. But individual lenders set the rate on their different loan products according to their costs and their exposure or confidence in a certain area. Some of our Jade lenders specialise in certain sectors such as marine finance and as such can offer better interest rates on boat loans than say a lender that focuses primarily on say home lending.
An interesting factor in regards to interest rates to consider when looking over a longer term at the big picture is the approach by individual lenders. The official cash rate set by the RBA is essentially the foundation of the price lenders pay for their funds in Australia. But some lenders will be sourcing funds from overseas markets and the price they pay for funding may differ.
Lenders also have to take into account their own operational costs, like any business. Over several years, these costs may increase. However, consumer lending is a competitive area and lenders in general will be looking to keep their rates at competitive levels.
Jade Boat Loans has accreditation with many lenders which provides us with many choices when it comes to sourcing you the cheapest interest rate boat loan. To review different lender rates against the rate offered by Jade, refer to our Calculator for boat repayments to compare repayments.
The next RBA meeting to discuss interest rates is scheduled for May and, as with many in the financial sector, we will be closely awaiting the decision.
To take advantage of our current low interest rates , contact 1300 000 003 for a quote.
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.
