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Credit Connect Capital Blog

Credit Connect Capital Blog

While record low interest rates may be great for home buyers, there's not a lot of joy for self-funded retirees! But one private lender has a solution.

As developers struggle to secure finance to complete projects, the role of the private loan lender in Australia is gaining more importance.

With major banks increasingly reticent about loaning money, it's no surprise that private money lenders are stepping up in Australia.

Wednesday, 17 December 2014 13:13

Save Our Pensioners From Low Rates

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Scan the historic graph below to see how much the retiree living off their nest egg has been disadvantaged by low interest rates in the last decade; indeed, how much more disadvantaged investors have become November 2011. Since the truth is that no one can predict markets or the next interest rate move, and if they could, a 0.25% or 0.50% change in interest rates in either direction, would not make a meaningful difference to investors – alternatives are needed!

Monday, 27 October 2014 16:21

Advisors Should Not Let Their Investors Miss Out

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Peter Benson, CEO of Credit Connect Capital Limited, says it is a long time since he has seen conditions so favorable for commercial lenders in over 20 years in the industry. He said, “the number of credit worthy borrowers prepared to provide first mortgage security over real property, importantly at low LVRs, is tremendous, and that puts investors who lend on commercial loans in the box seat – they have a lot of choice”

Low rates are essential for the rebalancing of the Australian economy and to encourage dwelling construction to support population growth but lenders have not necessarily participated to the extent that they could or the RBA would like to see – graph below. The RBA has signaled persistent low rates and construction lending represents an opportunity for smart investors seeking higher returns.

As a non-bank commercial mortgage manager, Peter Benson, CEO of fund manager Credit Connect Capital Limited, can generate income in all sorts of property market conditions but he prefers an orderly market and thinks the RBA’s comments on the Australian property market are sensible. 

Peter commented, “They managed the 2004 situation along with APRA and played an important role in preventing a property bubble.” Peter Benson believes the RBA and APRA have the tools and the will power to prevent a market wide property bubble.

Wednesday, 08 October 2014 00:00

Over 60's Interest in Property Hardly Surprising

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It is hardly a surprise that people approaching retirement have turned to property as an investment solution for retirement, given the performance of the alternatives.

In its recent Financial Stability Review (Sep’14, p50), the RBA noted that while property investment and gearing increased only modestly since the early 2000s, “the share of investors aged 60 years and over increased significantly.”

The relative wealth preservation ability and income potential of property might be the reason.

The RBA concluded that “Recent data do not show signs of a bubble.” in a research discussion paper titled Is Housing Overvalued? (June 2014).

Last week’s RBA talk about credit controls, the so called macro-prudential, is a way of retaining low interest rates and maintaining overall sensible growth in housing prices.   

The RBA stance flags the economy needs low interest rates to promote economic growth. The RBA does not want to use of higher interest rates as a way to subdue property markets given that housing construction, an anticipated engine for economic growth in a post mining-boom world, has started to pick up. Lower interest rates also help exporter growth by keeping the Australian dollar at a lower level.

Commercial lending is a legitimate way to boost income returns without the need to invest directly in property. The Credit Connect Select Fund gives the investor s the ability to earn a higher income, select a range of commercial loans and have the first mortgage protection.

Tuesday, 28 January 2014 15:20

What is a Mortgage Default?

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We were recently asked what a mortgage default is, so we thought it would relevant to discuss the ins- and-outs and exactly what is involved and how it impacts the borrower.

If you lend money to a borrower who offers you a first mortgage on their property, your security is a registered first mortgage. If the borrower defaults under the mortgage and does not meet the interest payments to you, the borrower is then deemed to be in default of the loan.

Mortgage default is a situation when someone is not able to pay their mortgage and as a consequence the loan will be considered “in default,” meaning the company or person who holds the mortgage can take control of that property. 

Tuesday, 21 January 2014 14:30

If It Sounds Too Good To Be True

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Ever heard the saying "It sounds too good to be true". It really is a valid point, especially in the finance industry.

When we hear of returns especially in this current market being offered from 15-30% the "alarm bells" should start ringing and big warning lights should flash all around the article your reading which offers such a return. There are numerous schemes that offer these returns, which are seeking your hard earned pennies to invest in or should we say possibly lose your money in. One thing you need to clearly identify and investigate is where specifically where your funds are being invested.

Monday, 25 November 2013 11:37

The Bubble Muddle

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On the 4th of November 2013 the Australian Bureau of Statistics (ABS) released the price change index for Australia’s eight capital cities to show that weighted average prices had increased by 1.9% in September 2013 quarter. 

The ABS chart below shows that recent increases have followed a period of decreases, statistics that hardly accords with the bubble talk of many commentators, which raises the question of why such commentary persists when Australia’s property market of the past decade appears to have responded to policy intentions set by the Reserve Bank of Australia (RBA) and the Australian Regulatory and Prudential Authority (APRA). 

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