In the midst of significant changes, Pinion Finance is thrilled to introduce Clint Emslie as our newest team member! As we bid farewell to Michael Bagshaw, we extend our gratitude for his contributions. Michael has decided to step away from Pinion to pursue his personal interests outside of work, and we wish him all the best in his endeavours.
With fresh energy and expertise, we welcome Clint to the Pinion Finance family. With a wealth of experience from his tenure at Commonwealth Bank, Clint joins us with a background specialising in regional and agribusiness relationships. Having spent over seven years working closely with agribusiness clients in South Africa, he brings a unique perspective and skill set to our table. We're thrilled to have him on board, ready to serve you better and enhance our offerings!
Navigating growth and expansion in ag finance
As Pinion Finance continues to grow, we're ensuring we have the right people to meet your needs. We've been busy securing new engagements and working closely with our clients to ensure their debt structures are solid and their pricing is fair. It's fascinating to see how competition in the market can drive positive changes for our clients. We are also thrilled to have successfully conducted farm business finance workshops in Colac and Hamilton in Victoria. These workshops were designed to help business owners gain a better understanding of their financial performance and strengthen their relationships with their banks.
EOFY approaches
As the seeding season winds down, it's time to start thinking about tax planning for the end of the financial year. If you're considering purchasing new machinery or equipment, remember to contact us for financing options. While interest rates are always a hot topic, managing interest rate risk is especially important in the current environment. Our team is here to help you navigate these uncertainties and find the best solutions for your needs.
Below are the interest rate forecasts by the big four banks in May 2024.
ANZ predicts that the current level of 4.35% will be the cash rate’s peak, with the first cuts to start around November 2024 and rates dropping to a level of around 3.60% by mid-2025.
CommBank predicts that the current level of 4.35% will be the cash rate’s peak and that the first cut is likely to occur around September, with rates eventually dropping to around 2.85% by the middle of 2025.
NAB economists predict that the current level of 4.35% is the cash rate’s peak, with the first cuts to occur in the December quarter of 2024 and rates reducing to 3.10% by the end of 2025.
Westpac predicts that the current level of 4.35% will be the peak, and that we might expect the first rate cuts to occur around September, with the cash rate eventually settling at 3.10% in the September quarter of 2025.
Keep in mind that these forecasts are just predictions and are subject to change by the big banks.
The latest RBA meeting in May saw a change in rhetoric to a more hawkish tone. Inflation is easing slower than anticipated, and this has caused some economists, most notably Warren Hogan, the chief economic advisor of Judo Bank, to suggest that we may see more rises before an easing of the rate. This view among economists is quite isolated, and we believe the views expressed by the Big 4 remain fair at this time.
It is clear that households and businesses are starting to feel some inflationary pressures, which will slow demand and drive inflation downwards. CBA is typically aggressive on its forecasts, but bringing interest rates back to the low threes by June 2025 is certainly plausible.
The changing interest rate environment is critical for managing interest rate risk - fixing rates currently is probably not sensible, even for machinery and equipment contracts. In the current environment, a variable-rate loan is likely to save you interest over a three to five-year period as opposed to a fixed-rate loan. If necessary, have a chat with Pinion Finance to explore this further.
The headwinds on the livestock industry recently have caused some concern around debt capacity. However, due to the way banks assess transactions, typically using five to seven-year rolling average prices (through the cycle pricing mechanism) helps to maintain consistent year-in-year-out earnings and debt capacity.
Stay connected and stay supported with Pinion Finance
At Pinion Finance, we're not just about transactions; we're about relationships. Whether you seek financing advice, debt management strategies, or simply wish to chat, know that our doors are always open.
Contact Clint Emslie for more information
0472 685 305
cemslie@pinionadvisory.com