2018 has been one of the more interesting years in my career. I have pretty much watched the perfect storm from the safety of the GPS niche harbour.
The banks don’t look like retuning to residential construction lending anytime soon. My view is that when they return, they will only be looking at a smaller percentage of the market with a focus on $20 million-plus lending.
There will be an increased requirement for the banks to use tier one capital, so I expect that their interest rates will rise.
There has been talk of a rise of non-banks with an influx of new operators. I have not seen a lot of evidence of this in the GPS market.
Most new operators quickly move away from residential construction lending when they realise how hard it is to balance their funding cashflows. Other forms of lending have plenty of scope and are easier from a funding cashflow perspective.
I see that the credit crunch for residential construction lending will only tighten in 2019.
Established operators like GPS will use the market conditions to continue to improve quality not quantity.
This will probably be the last newsletter before the end of 2018. It is heads down for all of us at GPS getting all the loans in our pipeline settled before Christmas.
GPS is a word of mouth business. Thank you to everyone who has referred business to us. It is truly appreciated.
We wish you all a happy and safe break and look forward to working with you in 2019.