With the caravan show season and buying time underway, RV buyers may reconsider their finance options due to the latest interest rates increase. Buyers may have yet to finalize purchases made at the Sydney Supershow, and the Queensland Supershow is less than a month away.
With no pause but a May decision by the Reserve Bank of Australia (RBA) Board to lift interest rates may have many buyers experiencing their pause and reconsidering the Caravan loans and seeking cheaper RV finance sourced through Jade Caravan Finance.
The May decision did come as a surprise to many, especially in the financial markets. With the latest inflation figures for the March Quarter from the Australian Bureau of Statistics revealing a further drop and following the interest rates pause in April, another pause was looking certain to many.
However, the RBA considered the persistently high inflation rate in services prices and the fact that at 7%, inflation was still too high as key reasons for a further increase.
Dr. Philip Lowe, Governor of the RBA, said that the outlook, not reaching the upper end of the target - 3%, until the middle of 2025, is too long for high inflation to continue. The Board is committed to returning inflation to target and sees that the pace to achieve that objective must be quickened.
The 0.25% interest rate will impact most lending areas, with potential increases in caravan finance rates for some lenders in the RV market. Buyers concerned about their financial prospects are assured that we are committed to sourcing cheaper interest rates for buyers of all types of RVs.
RBA May Monetary Policy Decision – Main Messages
As mentioned above, the main theme in the statement announcing the RBA Board’s May decision is returning inflation to the target sooner. The current forecast is for inflation to fall to 4.5% in 2023 but not to 3% until the year after next. In deciding on a further rate rise, the Board outlined the negatives if high inflation rates were to become entrenched.
These included the harm many would experience, the necessity for even higher interest rates, and higher unemployment.
Main messages: -
- Goods inflation is easing, but services inflation remains at levels considered too elevated.
- While costs of labor are increasing, there is slow productivity growth.
- Provided a rise in productivity is realized, wage growth is in line with the target for inflation.
- The Board is still at the possible risk of a price-wages spiral.
- The priority is still to return the current high inflation rate to the 2-3% target and keep the economy on an ‘even keel.’ The narrow pathway to achieving this objective was again mentioned.
- The outlook for growth in the economy is still ‘below trend.’ In 2023 growth of 1.25% is expected, and 2% by the year after next.
- As a result of the high-interest rates and high inflation, there is a slowing in demand as Australians experience cost of living pressures.
- Uncertainties remain around demand and issues in the global economy. Services inflation internationally is also very high, which could be the experience in Australia.
- More interest rates could be needed to drive inflation down over a shorter timeframe.
On the evening of the May rate decision, Dr. Lowe elaborated in remarks at the Reserve Bank Dinner in Perth. Singling out the prices for energy, education, healthcare, and hospitality as staying very high.
Dr. Lowe reiterated that the rate pause announced in April was to provide the Board with additional to obtain updated data. Now available and assessed, that data warrants the 0.25% cash rate increase. Australia was taking more time than some economies to drive inflation down. Dr. Lowe pointed out that this was because the Board was looking to keep the gains achieved in the employment area.
While remarks at the dinner provide further insights into the May decision, specific details of what options were discussed will become available with the release of the minutes on 16 May.
Caravan Finance Impacts
The cash rate which the RBA Board determines is a lending rate for banks and other lenders and essentially a cost of lenders acquiring funds. Changes to the cash rate impact lender costs and are typically passed onto customers in increases or decreases in lending rates.
Following the May increase, it would be expected that at least some of our lenders would increase their caravan finance interest rates on some loan products. But there will be variations, with some lenders offering better rates than others. Some lenders expecting the rate rise might have priced that forecast into their rates before the RBA decisions.
With 60+ lenders, we can quickly assess a large section of the RV lending market and source the cheapest RV Loan rates to suit individual customers.
Following the latest RBA rate rises, buyers can still secure cheaper interest rates through Jade Caravan Finance 1300 000 003.
DISCLAIMER: THE DETAILS AND INFORMATION IN THIS CONTENT ARE PREPARED AND PRESENTED PURELY FOR INFORMATION AND ARE 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.