As was predicted by banks and economists and strongly inferred would happen by the RBA Board earlier in the year, interest rates were hiked again at the RBA’s July meeting. The RBA July rate hike is the third for this year and the outlook is it won’t be the last. The RBA July rate hike will impact interest rates on motorbike loans and put pressure on loan applicants to utilise finance brokers for the cheapest loan rates.
The rate hike for July is another 0.5%, the same as June, which leaves the cash rate at 1.35%. The reasons the RBA is embarking on this rate hike cycle is to withdraw the extraordinary support through low interest rates provided due to COVID and address the surging rate of inflation.
Inflation is being experienced by all Australians with increasing prices for many goods and services. Currently sitting at 5.1%, inflation is tipped to rise higher, possibly to 7% over the coming months. While the RBA has acted with rate hikes in May, June and now July, it will take a period of time before these moves see a drop in inflation.
For those with savings bank accounts, rate hikes should represent a small win. But not all banks have been passing on the rises to savers. Jim Chalmers, the new Federal Treasurer, has come out and stated he would like to see Australian’s banks pass this increase onto savers to ease rising price pressures.
We provide an overview of the RBA Board’s statement announcing the 5 July rate decision and the affect it may have on motorbike loans.
July 5 RBA Statement
The RBA Board’s July statement opens with a comment around the rate of inflation globally being high and driven by the disruptions being caused to the supply chains very much as a result of continuing COVID issues plus fall-out from the war in Ukraine as well as strong demand a reduction in capacity by businesses to meet that demand.
The monetary policy decisions globally are responding to high inflation levels but as the Board notes, this will need time before any real effect is seen. While the rate of inflation in Australia is high, it is not at the same high levels being experienced in some regions.
While global aspects are contributing to rising inflation in Australia, local issues are also contributing. A tight labour market combined with strong demand of particular note. Floods continue to impact inflation especially in regard to produce prices which are placing pressure on households.
The Board sees the situation being assisted and a more sustainable and improved balance between demand and supply by the rate rises. The outlook in the medium term is that higher inflation is set-in but a clearer picture will be seen when the June figures for the CPI are released in August.
The resilience in the Australian economy and low unemployment rates were repeated in the July statement. Unemployment is currently steady at 3.9%. Consumer behaviour in regard to spending with pressures caused by soaring prices and higher interest rates remain of concern to the central bank. These aspects will be watched closely as will the outlook on a global basis.
While the July 5 rate hike is significant, it is still seen by the RBA as another stage in the process of normalising rates with the withdrawal of pandemic support. Additional rate hikes have been flagged by the RBA. The Board’s next meeting is 2 August.
Outlook for Interest Rates
So what can be expected in rate hikes in coming months? While the RBA Governor has intimated that similar hikes may be in store, some analysts say the rise could be in the vicinity of 0.75% while others are expecting it could be as low as 0.25%. Much will depend on the inflation figures to be released in coming weeks.
While these rate hikes are significant and when combined with the pressure on budgets from soaring prices is significant, the overall interest rate situation needs to be place in the right context. Yes rates are on the way up and so is inflation. But these rate hikes come on the back of 20+ months of record low rates. This cycle of increases is normalising interest rates.
Effect on Motorbike Loans
Lending interest rates will follow the RBA rate hikes. How much individual lenders will lift their rates will be based on their own circumstance and corporate guidelines. But in general, rates on consumer finance including for motorbike loans can be expected to continue to rise.
Existing fixed interest rate motorbike loans will not be impacted by the rate rises. A fixed rate consumer loan for these types of goods remain unchanged. We source our Secured Motorcycle Loan at a fixed interest rate.
As motorbike loan interest rates vary across the lending market, those seeking new loans can benefit from our services. We have the capability to quickly and easily access multiple lenders to secure the cheapest rate applicable to individual loan applicants at any particular point in time.
For those intending to purchase a new motorbike with finance in the coming period, the RBA’s message that more rises are ahead should be heeded. Secure your loan and your motorbike as quickly as possible to beat the next rate rise.
To secure a motorbike loan before the next rate rise contact Jade Bike Loans at 1300 000 003
DISCLAIMER: IN REGARD TO ANY ERRORS OR MISREPRESENTATIONS IN THIS MATERIAL, NO LIABILITY IS ACCEPTED. THE DETAILS, CONTENT AND DATA ARE PRESENTED PURELY FOR GENERAL INFORMATIONAL PURPOSES FOR MOTORBIKE BUYERS AND THOSE SEEKING MOTORCYCLE LOANS. THIS IS NOT INTENDED AS THE SOLE SOURCE OF INFORMATION FOR FINANCIAL DECISIONS. IF SPECIFIC ADVICE IS REQUIRED AROUND FINANCIAL DECISIONS, READERS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.
