Australians have what we consider a healthy obsession with interest rates. As a lender that has built a business model around achieving cheap interest rate loans for our customers across our loan portfolio, we are extremely aware of the significance of interest rates to achieving financial objectives. The lower the rate the more affordable the repayments and the sooner our customers can own their business assets and consumer goods and hit those financial targets.
We are completely across movements in rates and trends across the markets and we also keep abreast of what is being discussed in the financial media. We are well aware that any commentary and opinion whether backed by data, research and figures or not, has the potential to influence important purchase decisions by both individuals and businesses.
Our team take note of what is being discussed across many channels to analyse and consider so we can not only make adjustments to our own position but we can enlighten and clarify the detail through our informative articles and educational blogs.
One topic which has popped up in the media recently is speculation around an increase in interest rates. This discussion has emerged as a result of a significant increase in residential property prices in key areas. A spike was driven by increased demand related to the historic low interest rates on home loans. The speculation, or in some cases even the suggestion, is that the RBA should increase interest rates to put a dampening on this surge in housing prices.
While the discussion is primarily around home loan interest rates, any changes made in the official cash rate by the RBA can have a potential impact on other lending sectors. That is on our customers in asset finance, consumer loans and business finance.
If you have also heard or read these speculative comments, you may be wondering if there will be an increase in interest rates and how it may affect any loans you currently have or intend to take out through Jade Finance or other lenders. We’ve put together this brief overview of interest rates for your information and to provide you with some clarity on where rates might head in the near future.
RBA and the Official Cash Rate
When speculation around a rise in interest rates was first raised, Philip Lowe, Governor of the Reserve Bank addressed the matter directly. He commented that despite such suggestions that the RBA should raise rates to slow the rise in housing prices, the RBA had no intention of raising the cash rate at this point in time.
In several speeches, Dr Lowe has mentioned the specific indicators the RBA board would be taking into account before making any changes to interest rates. These would include the rate of growth and level of inflation and employment figures. While Australia has seen a remarkable drop in unemployment over consecutive months, decreases which exceeded even the expectations of Treasurer Josh Frydenberg, the current level was not significant to indicate a rate rise was imminent. More statistics here.
The official cash rate is significant to all lending rates. It is not the rate that applies to either consumer loans or business finance but it is the rate that determines lenders costs to acquire their funds. Therefore it is a key determinant in the rate that individual lenders apply to different types of finance.
Based on the recent comments from Dr Lowe and the current economic climate coming out of the COVID-induced recession, we are not expecting interest rates on our loans in the short term. In fact, Dr Lowe has indicated previously that he expected the cash rate to remain low through 2021 at least.
Lender Interest Rates
Currently, the official cash rate is 0.1%. To see what interest rates Jade Finance is currently achieving on different loans, simply refer to our car loan interest rates. No, it is definitely not 0.1%. From that cash rate, individual lenders must calculate the rate on funds they lend based on their costs and their approach to a particular lending market. Some may favour one sector over another. For example, the banks tend to be the major lenders in the home loan sectors while some of our non-bank lenders are far more competitive than the banks with say equipment finance.
As we are accredited with multiple banks and non-bank lenders our consultants have a vast and varied lending panel to source the cheapest rates for specific loan categories.
Achieving Better Interest Rates
In addition to having access to many lenders, including the highly competitive non-bank lender market, Jade Finance has considerable bargaining power in many lending markets. We utilise that power, with honed negotiating skills, to achieve the cheapest rates for our customers.
We’ve provided comparison charts for customers to compare our cheap rates with a selection of other lenders in key markets. Refer to these interest rate comparisons for details.
With our consumer finance loans, you will notice there is an advertised rate and a comparison interest rate. The comparison rate is derived on a specific loan at the advertised interest rate but with some fees and charges factored in. Details of the example are noted alongside the rate. Displaying this information is required by consumer credit laws.
How much do cheap interest rates really matter?
To answer that question, simply use our car loan repayment calculator to work up different loan repayments with different interest rates. You’ll quickly realise that even a seemingly small variation in the interest rate can make a marked difference to the monthly repayments.
Our team will be maintaining constant watch on the interest rate scene across the lending market and posting updates when any relevant matters arise. In the meantime, take full advantage of the historic low interest rates on offer to secure finance for your requirements.
For cheap lending, contact us at 1300 000 008 today.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.