Following the RBA shock decision to hold the cash rate steady rather than cut, operators can secure affordable equipment finance rates through expert brokers. When the Reserve Bank Board announced it was holding the cash rate on 8 July, the financial markets and many businesses were shocked. It’s fair to say that pretty much everyone was expecting a 0.25% cut to the cash rate with flow-on rate cuts through both commercial and consumer lending markets.
Especially coming early in the financial year when asset acquisitions are a priority for many operators, the decision may have left many questioning their next move. Weighing up their options as to whether to continue with that machinery purchase or to wait and seeking options for securing workable finance. If the purchase is to replace unserviceable units, those questions may need quick resolutions. The decision could be a major blow for the many individuals that are in the process of setting up their own business with the purchase of construction, earthmoving and other machinery.
As specialists in asset acquisition loans, we provide this explainer of why the RBA made that decision and the opportunities available for operators to secure workable machinery loans.
RBA July Monetary Policy Decision
At its scheduled meeting on 8 July, the Reserve Bank (RBA) Monetary Policy Board made the decision to hold the cash rate steady at 3.85%. In a first for the bank, the announcement revealed the numbers for and against the decision – 6 in favour with 3 against the decision. No individual Board member names were announced, but simply revealing the numbers is quite a change for the RBA. This has not been announced before.
A brief statement is issued to announce these decisions, with more detail on the discussions held by the Board available in the Meeting Minutes which are published on the RBA website a few weeks after the meeting.
In the initial statement, the RBA Governor Ms Michelle Bullock highlighted inflation and uncertainties with global tariffs and trade as the key reasons for the decision. Inflation is seen as moderating but there is an expectation following some recent data, that the CPI figures for the June quarter may be stronger than the bank’s forecast. To ensure the inflation target of 2.5% is being sustained, the Board judged that they did have the time to wait for more data before moving again on rates.
With the USA continuing to change its position on imposing tariffs, the global scenario remains a key area of uncertainty. The Board expects developments in global trade could have an adverse impact on the global economic activity. These global impacts could impact Australia’s economy and remain an uncertainty.
While the Board is remaining cautious with the domestic outlook, Governor Bullock said the Australia’s Monetary Policy is well positioned to respond to international impacts if they affect domestic inflation and economic activity.
The Board will be considering the data available over coming weeks and will next meet on 11-12 August to make its next decision on interest rates. For those interested in further detail on the July RBA Board meeting, refer to the Bank’s website for the release of meeting minutes and the transcript of the Governor’s July meeting media conference.
Know the Basics of Competitive Equipment Finance Rates
Trying to time asset investments around RBA rate cut decisions and lenders reducing their loan rates may not be the most effective way to manage a business. Knowing the basics of how asset finance rates are set and offered, and how to secure your best offer, can be important in astute business financial management.
Lenders offering asset financing will be setting their individual rates according to their outlook for the rate market, the economy and their individual guidelines. Banks and non-bank lenders will offer varying rates and will change their rates according to their own schedule. A schedule which is not always aligned with the RBA meetings. You may hear reports of the markets ‘factoring or costing in a rate cut’, ahead of RBA decisions.
With so many commercial lenders in the market, operators of all sizes and in all industries can access brokers such as Jade, to source their loan. We have access to many lenders and the resources to quickly find each operator their best machinery loan rate.
Credit profiles and specifics of the loan application can affect the offer. Strong financials and a good credit rating will contribute positively to a better offer. New businesses without complete financials may need to utilise broker services to access specialist No Doc Loans. While a higher rate may be expected without complete financials, competitive rates are still sourced by our experts.
There are also variations in rates with loan products – Chattel Mortgage, Lease, Rent-to-Own, and CHP. New assets can attract better rates and loan terms and conditions than second-hand machines.
While waiting to see what happens with rates in August may be your current opinion, also consider the benefits you may be foregoing in the interim by not having that new machinery operating in your business and the possibility of a price rise on the required units.
For affordable equipment finance rates, request a quote from Jade Equipment Finance on 1300 000 003
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
" alt="">