A significant issue for GPS is the volume of very cheap institutional monies which is presently available. This is driving borrower rates down.
GPS does not want to get involved in a race to the bottom as this only benefits the large institutions. The reality is that as soon as there are better returns elsewhere those monies will evaporate from the residential development market.
GPS has demonstrated over the past 25-plus years that there is a need for lenders like us. This is because there is little loyalty shown by large financial institutions.
Many residential developers and builders in Southeast Queensland have become very wary as to whether the “blow ins” from southern states will be around to provide the long term support they require.
At this stage, I believe that there will be more pressure for a reduction of interest rates in 2022. I see it as more of a minor adjustment.
On the upward pressure side for interest rates, there is currently some interesting reading as to the direction of the bond market. Predicting the bond market is well outside my expertise.
Richard Woodhead | Managing Director