Following the RBA (Reserve Bank of Australia) Board meeting on the first Tuesday in February, those considering a purchase with caravan finance now have a better indication of what may happen with interest rates in 2022. There has been a lot of commentary around interest rates in recent months with many calling for, suggesting, predicting the RBA should increase the cash rate.
The February meeting was the first for the year and the first since early December 2021. With so many developments and impacts on the economy over that interval, many were keenly awaiting this meeting for the RBA’s decision and outlook.
Global supply issues continue to impact stock of goods in many sectors while the spread and increase in Omicron cases has put pressure on businesses with so many staff furloughed. There has been a significant surge in the inflation rate and the unemployment has continued to fall, despite the impacts of Omicron.
Prospective buyers with plans to purchase a new RV in coming months or are waiting delivery of their order will be keen to have clarity around interest rates especially in regard to caravan finance. We are covering off on the decisions and comments which emanated from the February RBA Board meeting and what effects the outcomes may have on caravan finance interest rates.
February RBA Board Meeting Outcome
At the February 2022 meeting, the RBA Board kept the official cash rate on hold at 0.1%. The rate has been at that historic low level since November 2020 after the RBA made several cuts in 2020 as part of monetary policy to stimulate the economy from the effects of the initial outbreak of COVID-19.
Since that time, the Board has been consistent in declaring the targets it was seeking to see in the economy to trigger an increase. Those targets are inflation sustained in the 2-3% range and unemployment around 4% or lower. While the Board maintains it is waiting for the targets to be met rather than an exact timing, it has regularly stated that it did not expect those conditions to be achieved until around 2024.
But the economy has recovered more quickly from the effects of COVID-19 than anticipated, a point acknowledged by the RBA in the statement announcing the February outcome, and inflation has surged recently. It is now looking highly likely that an increase in the cash rate could be made this year.
The RBA notes that the economy recovery has not been derailed, despite the large number of Omicron cases and the disruption this variant has caused to many business. It sees the pandemic as a reason for uncertainty, but expects a lift in spending as the case numbers decline.
The balance sheets of businesses and households are in a good position and investment by businesses is continuing to lift. The construction industry has a significant amount of work in the pipeline and the economy has been well –supported by macroeconomic policies. All these points are positive for the economy moving forward.
December 2021 figures have unemployment at 4.2% and this is indicating a strong recovery in the labour market. The RBA’s forecast for unemployment is below 4% in 2022 and dropping to 3.75% by end 2023.
They note wages growth has seen some increase but it is only gradual as forecast. There are a large number of job vacancies so as the labour market continues to tighten, wage growth should rise gradually.
The recent surge in inflation has been the cause of much of the calls for a rate increase. While this has risen at a faster pace than anticipated the RBA confirms its intent to remain patient in regard to raising rates.
The same targets of 2-3% sustained inflation and unemployment figures dropping towards full employment remain.
The day after the Board decision on interest rates, RBA Governor Dr Philip Lowe addressed the National Press Club and provided additional insights into the RBA’s forecasts and outlook for the economy.
Dr Lowe summarised by saying that he was optimistic for the economy. He acknowledged that challenges still existed despite Australia weathering the effects of the pandemic extremely well. He pointed out that the economy was nearing the achievement of a key milestone in regards to unemployment. The forecast of 3.75% by 2023, if achieved, would be the lowest unemployment in Australia for 50 years.
More detail on Dr Lowe’s address can be obtained on the RBA website.
Position on Caravan Finance Interest Rates
To place this in perspective for caravan finance, the lending market in general has enjoyed historic low interest rates, including some of the best caravan loan rates, for the past two years. But that looks like coming to an end with a rise in the cash rate imminent some time possibly this year. Some analysts are predicting August.
Banks and lenders use the cash rate as a base and they then establish the interest rate they will apply to their different loan markets. If the cash rate is increased from the current 0.1% it would be expected to see a rise in lending rates across most if not all markets.
For those that already have a fixed interest rate caravan loan, they will not have any change to their loan. With caravan finance, a fixed rate is in place for the full term of the loan. This provides our Jade Caravan Finance customers with confidence and assurance that their loan repayments won’t alter with a fixed rate loan.
Calculate Your Caravan Repayments
While we always focus on achieving the cheapest interest rates at all times for our caravan finance customers, when there is a rise in the cash rate, it can flow through to increases by our lenders. So if you can bring forward your purchase and secure your caravan loan through us using the finance caravan calculator at the current low rates, it may place you in a better position than if you postpone the purchase to later 2022 or 2023.
Contact Jade Caravan Finance on 1300 000 003 to secure cheap interest rate caravan finance
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.