Despite calls from many voices in the finance and economics sector for the Reserve Bank (RBA) to move on interest rates the Board kept interest rates steady at its March meeting. The official cash rate has been at the historic low of 0.1% since November 2020. During 2020 the RBA reduced the cash rate on a number of occasions in the face of the economic effects of COVID-19 and to stimulate the economy.
The outcome of the low interest rate climate has been seen significantly in the housing sector where prices have soared in many markets. This was the initial catalyst for some analysts to call for rate rise in 2021. But more recently a surge in inflation has increased the calls for the RBA to act.
It has been predicted that the RBA will move on interest rates sometime in 2021 if not several times. The at the March board meeting, the RBA announced it would leave interest rates steady with cash rate 0.1% which continues the low interest rates scenario in many lending markets including caravan finance.
The March RBA Board meeting was held amidst concerning global and local events. The war in Ukraine and the flood situation in the eastern states which was only just emerging when the Board met on Tuesday 1 March.
Each meeting of the RBA Board on interest rates is followed by an official statement which outlines the Board’s reasoning and can throw some light on future decisions. This statement is always worth reviewing for those considering taking on finance.
In the statement accompanying the March 2022 Board decision, RBA Governor, Philip Lowe confirmed the Bank’s position of demonstrating patience. Patience in regard to the Board’s target employment and inflation figures to be achieved prior to increasing interest rates. The Board will maintain a supportive position on monetary policy.
The Ukraine conflict was noted as a new basis for some uncertainty. Mr Lowe highlighted that the global recovery from the coronavirus pandemic was continuing with Australia emerging and rebounding from the Omicron wave. Investment by business and consumer spending were both positive. Increases in the prices for energy and the disruptions caused by supply chain matters had contributed to sharp inflation increases in certain countries.
Australia’s unemployment rate of 4.2% which is the lowest in the last 14 years is evident of Australia’s pick-up in the economy. However, it was acknowledged that the rate of inflation was rising at a pace faster than had been expected by the RBA Board. The forecast now is for the rate to reach 3.25% over coming quarters before reducing to a 2.75% level over 2023. Patterns of consumption are expected to return to more normal levels as supply chain issues are resolved.
The inflation target for the RBA is a sustained level in the 2-3% range. The Board said it was too early to draw the conclusion that the current pick-up in inflation would be sustainable. Analysts and economists have predicted a rate rise by June.
The RBA Board will next meet on the first Tuesday in April. More information on the effect of both the war in Ukraine and the economic impact of the floods will be available and it will be interesting to see how the Board responds.
December Quarter Accounts Figures
The first week in March was also the timing for the release of Australia’s National Accounts figures for the 2021 December quarter. This period covers September through December 2021. The figures were announced by Josh Frydenberg, Federal Treasurer who said the figures showed a 3.4% growth in the economy in the period.
Mr Frydenberg stated this 3.4% was the biggest growth figure in the past 46 year period. He went on to say that Australia is outperforming a great number of other countries and that the Australian economic recovery from the coronavirus pandemic as one of the strongest globally.
The strong consumption rebound in the December quarter followed the most populous states – Victoria and NSW, emerging from the Delta outbreak lockdowns. The Omicron wave had not derailed the economy, Mr Frydenberg said. Comments which are in line with those made in the February statement by the RBA Board when announcing its decision on the cash rate.
Caravan Finance Impacts
So what does all this mean for those considering purchasing a caravan with finance? As Mr. Lowe mentioned in the RBA statement, lending remains extremely accommodative. Meaning, caravan loan repayments interest rates in lending markets remain very low, making borrowing an attractive proposition for many.
While the RBA is responsible for setting the official cash rate, this is rate for loans between banks. From that basis it is the individual decisions of the banks and non-bank lenders to set their interest rates in their own markets.
For caravan loans, our Jade Caravan Finance rates will always be better and prospective customers can review the rates on our Interest Rate Comparison Chart. Caravan loans may offer a fixed or a variable interest rate depending on the lender. Our caravan loans have a fixed interest rate and unlike loans for ‘bricks-and-mortar homes’ a fixed rate loan for a ‘home on wheels’ is fixed for the full loan term.
Securing a fixed rate caravan loan while the official rates are at historic lows, will ensure your loan is protected against any rises in the cash rate which may flow through to the lending market in the future.
Contact Jade Caravan Finance on 1300 000 003 for a caravan loan quote.
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.