2014 has been an exceptionally good year for GPS. It would not have been possible without the ongoing support of our loyal Investor and Borrower base. All of us at GPS thank you for your continuing support. It is truly appreciated.
New Funds and Funding Lines
In the course of 2014, GPS opened two new Mortgage Funds and entered into arrangements for the co-funding of GPS sourced and managed loans with other Funds. This has been a result of an industry acknowledgement of the quality of the GPS product. It has supported our decision to “stick to our knitting” for residential construction loans in south east Queensland and northern NSW.
The additional funding lines which are now available to GPS will assist us to secure quality lending opportunities as our maximum loan size is now $10 million when co-funding is available.
The ability of GPS to fund larger projects allows us to be even more selective with loans and assists us to generate greater diversity of investment opportunities. It also assists us to retain our Borrower base as they traditionally graduate to larger and more sophisticated developments.
Another benefit of the new Funds is that we now have the ability to subordinate the interests of loans. This will allow GPS to limit the maximum LVR on loans by the Select and Pooled Funds to be no greater than 69.97%.
Soap box subjects of mine, such as Future of Financial Advice (FOFA) for financial planners, lengthy discussions over the capitalisation of the banks and their “too big to fail” mentality together with declining returns from fixed term deposits have received quite a bit of media attention in recent times. I will therefore pass on making any further comment.
To end the year on a positive note, I was pleased to see the Reserve Bank announcing they will work with APRA (the Regulator of the banks) to make the next “growth” period of the property cycle more sustainable. This is good news for GPS Investors. Brisbane has not seen the increases in property values of Sydney and Melbourne. The South East Queensland property market has “plodded” on. Price growth is good for GPS investments as it provides an added buffer to the LVR. My preference is for a long period of sustainable price growth.
Rate Cut on Agenda as Stevens calls for lower dollar
“Reserve Bank governor Glenn Stevens has stepped up his rhetoric about the need for a lower dollar. Whether he meant it or not, his blunt statement yesterday will add to market speculation that a rate cut could be on the cards next year if the dollar doesn’t fall low enough”. Source: Glenda Korporaal. The Australian 3 December 2014.