The Reserve Bank announce yet another increase to the official cash rate at the Board meeting on October 4. The RBA started lifting rates in May and the October decision represents the 6th month in a row for an interest rate rise. Prior to the RBA Board meeting there was growing commentary around the need for the RBA to ease up on these interest rate rises as the prospect of a global recession emerges.
The October rate rise was expected with many finance analysts and commentators predicting another 0.5% hike after similar rises in June, July, August and September and the 0.25% increase in May. In a welcome sign for many, the RBA announced a 0.25% increase but also indicated strongly that additional rises would be expected.
To assist caravan buyers planning a purchase with finance, Jade Caravan Finance has summarised information on the latest interest rate rise from the RBA and provided an outline of what these continuing rate rises mean for caravan finance.
October RBA Interest Rate Rise Statement
The Governor of the RBA, Philip Lowe, releases a statement after each monthly Board meeting to announce the rate decision. These statements can be worth following as they provide the basis for the Board’s decision, an overview of the economic environment and can give vital clues as to the direction of the Board’s thinking in regard to future rate decisions.
Major points for October:-
- The RBA raised the official cash rate by 25 basis points or 0.25%
- The Board remains committed to the return to target inflation, 2-3% to be achieved over time.
- Further increases are expected in the coming period.
- Acknowledgement that rates have been increased substantially in a brief time period.
- The current rate of inflation is in Australia as in many part of the world, too high.
- Both global issues and events as well as factors in the Australian economy are contributing to high inflation.
- Strong domestic demand at a time of constraints on supply are a contributing element.
- The expectations are for further increases in the rate of inflation before a decline is expected.
- The rate is expected to reach 7.75% in 2022, just over 4% in 2023 and start to near target of 3% the following year.
- As supply chain issues globally commence to be resolved and as the effect of interest rate rises is realised, inflation should moderate.
- The national income is recording good boosts from the record levels in the terms of trade.
- Issues around the tight labour market continue as is indicated by the August unemployment figure of 3.5%.
- Jobs ads are at high levels indicated businesses seeking workers and that unemployment is expected to drop to lower rates in the months ahead before recording increases as various conditions moderate.
- Particular scrutiny is being made of the way firms are setting their prices in regard to labour costs. Price stability being important to economic strength.
The statement included a repeat of several points which were mentioned in statements issued in previous months. This included how the Board faced a narrow opportunity to achieving the objective of return to target inflation while holding the economy steady, amidst uncertainties.
Uncertainty exists in regard to the global economy especially due to recent deterioration of conditions. Domestically, uncertainty remains around the behaviour of consumer spending as rates and inflation pressure household budgets.
The RBA Board will next meet to discuss the official cash rate on Tuesday 1 November 2022. This will follow the release of Treasurer Jim Chalmers’ October budget. New figures on unemployment and inflation may also be released by the ABS before 1 November which will no doubt be taken into account by the Board.
Caravan Finance Outcomes of Rate Rise
Lenders and banks across the lending sector react and respond to RBA rate rise decisions according to their own individual guidelines. All four of the major banks responded quickly to raise their variable rates and rises would be expected across most lending markets including the leisure market.
For those that have already secured their fixed interest rate Secured Caravan Finance the loan rate and the repayments should remain unchanged.
For those planning to apply for a new loan, the quote and any loan offer will be based on the interest rates current at that time. As the RBA Governor has indicated further rate increases are imminent, expediting the application and the purchases is advisable.
Buyers can utilise our Caravan Financing Calculator to get an indication of how a higher rate may impact finance repayments on the caravan being considered. For a firm quote at the cheapest rates buyers should contact us.
Contact Jade Caravan Finance 1300 000 003 for finance on all types of caravans, RVs, mobile homes and camper trailers
DISCLAIMER: THE DETAILS AND INFORMATION IN THIS CONTENT ARE PREPARED AND PRESENTED PURELY FOR INFORMATION AND NOT INTENDED IN ANY WAY AS THE SOLE SOURCE OF FINANCIAL ADVICE FOR CARAVAN PURCHASING. IF ADDITIONAL FINANCIAL ADVICE IS REQUIRED, READERS SHOULD REFER TO A FINANCIAL ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY ERRORS, PRODUCT DESCRIPTION VARIATIONS, OR OTHER MISREPRESENTATIONS OF INFORMATION AS PRESENTED.