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Peter Benson

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

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 16:20

Economic Update - 27th October 2014

Low Interest Rates

Low interest rates, low growth and equity market volatility are making it particularly hard for those in their 60s as they approach retirement. Many commentators refer to the conditions as financial suppression imposed on people who have saved hard for retirement their entire life. We examine what is driving low interest rates and how long will they stay low. A diversification strategy is proposed for wealth managers to help them generate income for their clients and protect their capital using tangible security.

Friday, 10 October 2014 16:09

Economic Update - 10th October 2014

We are compelled to look beyond the headlines and examine the substance about the Australian economy and property market. We find the Australian property market is, on the whole, sound as security and we welcome the RBA’s approach. Nevertheless, as commercial lenders we remain selective, vigilant and maintain conservative loan to value ratios based on independent valuations, just in case of surprises. Such an approach served our investors well through the GFC and beyond.

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.

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.

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