For borrowers it’s been a very appealing lending scene over the 12-18 months. Lending rates across multiple markets have reflected the historic low level of the of the official cash rate. It was November 2020 when the RBA surprised many by further cutting the cash rate after cuts earlier in the year. Since then, the central bank have kept the official cash rate steady at 0.1% making borrowing for businesses and individuals on many types of loans extremely affordable and attractive.
Let's revisit and reflect. The decision to implement multiple rate cuts in 2020 transpired against the backdrop of a burgeoning global pandemic within Australia's borders. The tangible economic repercussions posed a formidable and immediate threat. In this context, implementing stimulus measures became the unequivocal imperative, necessitating a dual approach involving both fiscal and monetary policies to safeguard the Australian economy.
Fast-forward to the present, and a considerable transformation has taken place. Thanks to widespread vaccinations and collective dedication, the pandemic's grip has notably loosened. The economy is on an upward trajectory, albeit with some disparities, and even signs of inflation are surfacing.
Some may have grown accustomed to the era of accessible financing, harboring expectations that this paradigm would cement itself as the new norm. However, prudence dictates avoiding complacency. For those harboring plans for substantial acquisitions, such as a new truck, the time might be ripe to translate those intentions into action.
While our enterprise is built upon the foundation of offering low-interest rate loans, it's essential to remain cognizant that any escalation in the official cash rate by the Reserve Bank of Australia (RBA) could conceivably ripple through to interest rates extended by our lending partners. At Jade Truck Loans, we provide comprehensive insights into the latest RBA statement and demystify the repercussions of interest rate adjustments on truck loans.
November RBA Rate Decision & Outlook
The RBA Board met as scheduled on the first Tuesday in November, 2021 to make its monthly decision on monetary policy which includes interest rates. The month marks a full year since the Board cut rates. At the latest meeting, the Board held the official cash rate steady at 0.1%. In the statement accompanying the current decision, the RBA Governor, Philip Lowe, stated that economy was expected to bounce back relatively quickly following the Delta outbreak. But a source of uncertainty was the possibility of another health setback.
The latest RBA statement highlights the uptick in inflation to the current 2.1%, though it remains relatively moderate. The forecast envisions a progression to 2.25% throughout 2022, followed by a subsequent increase to 3% in 2023. It's acknowledged that uncertainties persist in the realm of global supply chain disruptions. The financial climate in Australia is described as "accommodative," characterized by notably low lending rates.
A noteworthy pivot in the RBA's trajectory, duly noted by analysts, pertains to the bank's bond buying initiative. The choice to terminate the RBA yield target and scale back the program is regarded as a reflection of the economy's marked improvement.
During the peak of the pandemic's economic ramifications, the bond buying program functioned as a significant pillar of support for the economy. The decision to reduce its scope can be interpreted as a positive signal for businesses, indicating a robust economic rebound.
The RBA has consistently maintained that an elevation in the cash rate would only be contemplated around 2024, contingent upon inflation establishing a sustained foothold within the 3% range. However, certain analysts are projecting a potential rate hike sooner than that, with some suggesting 2023 or even potentially as early as 2022. This underscores our call for vigilance and action, as the current landscape is far from a time of complacency.
Comparing Truck Loan Interest Rates
With historic low interest rates now marking a milestone, it would not be surprising for some to get used to the availability of finance at the current rates. But clearly, this will not last forever, even if Jade can achieve cheaper truck loan interest rates.
It may be worth paying attention to what even a small percentage change in interest rates could mean to a truck loan. Use our Truck Loan Calculator to easily see what the additional cost could be. Enter the loan amount which may be the full purchase price of a new truck. A preferred loan term up to 7 years and a balloon amount if desired.
Now calculate the repayments by inputting the current interest rate we are offering on the truck loan product of your choice. Note that the interest rates do vary on the different types of loans. Note that repayment amount. Now increase the interest rate by say 0.1% and note how the repayment estimate increases. Calculated over the full term of the truck loan and you can immediately realise the additional cost of a loan with a higher interest rate.
If you have plans to purchase a new truck in say 2022 or 2023, it may be worth bringing forward those plans to ensure you lock in the current cheapest interest rate. We offer truck loan products at a fixed interest rate. So once the loan is secured, the rate will remain constant over the full term of the loan, up to 7 years, even if/when the RBA increases the official rate.
Amidst the flurry of recent developments, including the relaxation of restrictions in Victoria and New South Wales (NSW) and the subsequent reactivation of businesses, it remains prudent for discerning operators to maintain vigilance over the prevailing interest rates. Strategic business proprietors are apt to retain a keen focus on the timing of their prospective new truck acquisitions, ensuring that this factor remains at the forefront of their decision-making process.
Contact Jade Truck Loans on 1300 000 003 for a quote on a truck loan at the current cheap interest rates.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.
