As widely expected, the RBA Board once again lifted the official cash rate when it met on Tuesday 4 October. A decision which will have a flow-on effect to interest rates across many lending markets. But the increase was not as large as was anticipated. Many analysts and finance experts were expecting another 0.5% hike while the October rise was 0.25%. This lifts the cash rate to 2.6% which is a 9 year high.
The lower rate rise comes amid many calling for the RBA to slow down on rate rises as budgets are stretched and there is a genuine prospect of a global recession as central banks across the world also lift rates. Many countries are experiencing inflation at much higher rates than the current rate in Australia. Jim Chalmers, Federal Treasurer, in a media appearance last week, said that level of possibility for a global recession had become probable rather than possible.
With 9 year high interest rates, those planning to apply for new motorcycle finance may look to Jade Bike Loans for better interest rates, cheaper bike loans to achieve a more affordable solution. Buyers are urged to act promptly as the key message coming out of the RBA October statement is that rates will be increased again this year. Reviewing what RBA Governor Philip Lowe said in the statement can provide buyers with insights into the current interest rates environment and may assist with making purchase decisions.
October Statement by RBA
The October statement by the RBA Board announces the decision to increase the official cash rate to 2.6%, a 0.25% rise. In making this decision, the Board reiterated its commitment to the return of inflation to its target level, over time. The target is 2-3%.
Governor Philip Lowe notes the substantial increase in the cash rate over a brief timeframe. An issue which the Board said it have reflected on when making the October decision. The statement says that additional increase would likely be required in coming periods.
Points of note:-
- Acknowledgement that Australia’s current rate of inflation is too high.
- Global issues are to a large extent the cause of high inflation. But the imbalance between domestic supply and demand is a contributing factor.
- Inflation is expected to rise further to 7.75% this year, prior to declining to around the 4% level in 2023 before finally achieving the 3% target around 2024.
- Resolution of the supply issues globally are expected to ease next year and as resolved, inflation should moderate. The effect of rate rises should also be taking effect by then and contributing to a fall in inflation.
- Economic growth in Australia is showing solid growth with record terms of trade levels providing a boost to the national income.
- Tight labour market is continuing with 3.5% unemployment recorded in August. The large numbers of job ads indicates further drops in unemployment ahead prior to increases as economic growth slows.
- Of particular interest to the Board is the how businesses set pricing and labour costs as stability in prices is necessary for strength in the economy.
- Uncertainty remains in relation to the global economic situation as deterioration has been recorded recently.
- Uncertainty also still exists in regard to spending by consumers domestically and how these levels respond to increased interest rates.
- Once again, the narrow way forward to achieve target inflation while ensuring the economy remains stable was mentioned.
Dr Lowe said the cash rate rise for October was required to reduce the rate of inflation and would assist with achieving a more sustainable balance between supply and demand. The Board expects that additional cash rate increases would be expected.
Motorcycle Finance Interest Rates and Loan Outcomes
Riders planning an upgrade of their current motorbike or new riders intending to purchase their first, would be smart to take note of Dr Lowe’s comment about further rises on the way. Once the RBA lifts the cash rate, the banks and finance companies follow with increases in their rates. By how much and when will be based on individual decisions by the lender.
The big four major banks immediately passed on the rate rise to their variable rate customers in the day following the announcement. While these rates primarily impact home loan borrowers, rises in other markets can be expected.
Sourcing the cheapest interest rate is key to achieving the cheapest loan. As interest rates vary across the motorbike lending market, using our services can assist buyers greatly in this respect. We are accredited with many banks and lenders. Providing our consultants with the resources to source the cheapest rates from a vast section of the market, quickly and efficiently. Saving customers time and hassle.
With further rises on the cards, the type of interest rate is also important to note. Variable rates are subject to change as the RBA raises rates and lenders follow. Whereas fixed interest rate motorcycle loans such as our Secured Motorcycle Loan will have the rate remain the same over the full loan term
To get moving on that motorbike purchase with finance prior to a possible November rate rise, give us a call today to lock in your loan.
For a quote or pre-approved motorbike loan 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.
