By Richard Blumberg, Founder & CEO, NOW Finance Group
Oh, for a crystal ball!
To describe the current global economic outlook as challenging would be something of an understatement. Central banks around the world are grappling with uncertainty and high inflation.  We have uncertainty caused by supply chain challenges, COVID-19 lockdowns (yes, they are still happening) and the tragic war in the Ukraine and related sanctions. The breadth and severity of sanctions has also had a material impact on the energy market as well as some commodities like wheat and nickel.
The question I have, then, is what is the risk of contagion, and will this further impact the global economy? Is stagflation something that may become a factor?
Geographic remoteness doesn’t, unfortunately, offer Australia much protection from the global economic impact of what’s going on. An increasingly integrated and interdependent global economy has exposed us to significant uncertainly – especially in terms of our inflationary outlook.
So what has been the RBA’s response so far? To date the central bank appears to be adopting something of a ‘wait and see’ approach. The interest rate market, however, is saying something different and has factored in a number of rate increases this year.
Not only will rising inflation make borrowing more expensive for consumers but increase the cost of capital for lenders. Pricing across the spectrum of lending products is  likely to increase in the short to medium term. In terms of the personal loans sector particularly, we are comfortable that the utility of personal loans is still likely to appeal to consumers looking to make larger purchases and/or consolidate debt. Invariably, however, many  lenders including banks will be compelled to raise rates to maintain margin and/or to charge higher fees to obfuscate what they’re really doing, with the consequence that transparency around personal lending products – already a contentious issue, will become even more murky as lenders pass on increased costs via fees.
On the plus side, consumers are becoming more educated around comparison rates. As the only provider in the market that doesn’t charge any fees on any of our loan products, this has been a really great way of distinguishing Now Finance from the rest of the market, and the banks in particular. At its most fundamental, it’s a stance that speaks powerfully to our transparency and putting customers first. So, we’ll continue to promote this strongly going forwards – especially in the current climate.