Interest rate rises are a hot topic in Australia (and other countries) at the moment and without question, asset finance is affected too.

Nodifi details all you need to know about asset finance rate rises.

The current landscape

At the time of writing, the current RBA cash rate is 0.85% after a 50 basis point rise at the beginning of June and a 25 basis point rise in May.

Our partners and their clients are affected by the RBA’s moves as these rates have a direct correlation with asset finance.

Asset finance interest rates, for example the rates attached to car loans, are affected despite receiving less publicity than home loans.

This is because the wholesale cost of borrowing money has increased across the board – or as some may argue, across the world.

Although the most recent rate rise from 0.35% to 0.85% may appear slight, asset finance lenders are increasing their rates.

According to most expert speculation, rates are likely to continue to rise by small(ish) increments over the next several months.

Rate rises are typically an answer to economic woes and perceived fear and in Australia’s case, inflation is playing a large part as well as the fact that RBA cash rates of less than one percent are not a sustainable policy.

The initial low cost of cash was the RBA’s answer to the economic stimulus needed to beat the pandemic’s effects.

Current rates
At present, base rates through Nodifi start from:

  • 4.09% for commercial
  • 4.44% for consumer

As rates rise, expect the Nodifi platform to be updated with the latest information and interest rates accordingly.

What our partners need to know

Unfortunately for many, the low rates that Australians enjoyed during recovery from the pandemic are a thing of the past – at least for now.

The cost of funds from all lenders has risen considerably and these rises are typically evident in asset finance more so than home loans.

In other words, when the RBA ratchets up rates on their end, expect the increase to be amplified in asset finance.

Nodifi Head of Inside Sales, Jordan Mutton, says that it’s important to look at the whole picture.

“If we zoom out and compare years, even decades past, rates are still incredibly low, however, when numbers head north, it can cause panic.

“Setting expectations and having the knowledge of the current climate and likely future scenarios is important when interacting with rate-focused clients.”

With the above in mind, Nodifi expects that like home loans, asset finance rates will see further rises.

“In my opinion, 4-5% will be the new norm for home loans while rates from 7% are expected to be the new norm for asset finance over the coming months,” confirms Jordan.

As always, Nodifi is here to help

If you’d like to discuss asset finance (or personal loan / business funding) rates, reach out to your relationship manager.

Having the right information on hand means that your clients can benefit from up-to-date answers.

A quick look back at interest rates

  • 1959: The RBA is established with rates set at around 5%
  • 1970: After hovering around 5%-6%, rates begin to rise
  • 1990: Rates reach an eye-watering record high of 17.5% in January of 1990
  • 2020: Answering the pandemic, the RBA dropped rates to their lowest ever of 0.1%
  • 2022: The most recent rate change (at the time of writing) saw a rise to 0.85%

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