When it comes to lenders and interest rates – it is important to consider where the money is coming from and what factors work for or against the rates that you receive. Are your rates determined by circumstances wholly outside of your lenders control? Will they change mid-term and leave you wishing you had something more stable? Most banks and lenders are opting for variable rates – at GPS we prefer to offer you some stability around your interest rate.
Over the past 25+ years, GPS has established a direct investor base. We don’t have any institutional funding which is tied to the Bank Bill Swap (BBSW), or other rates. Funds that use institutional money are common, and they are more at the mercy of rate changes and will therefore need to react as those fluctuate, which can make borrowing an interesting experience.
An advantage of GPS’s direct investor base is that we don’t need to increase interest rates because our cost of funding has arbitrarily increased like everyone else. Our investors are simply seeking a good return based on the risk, and they trust GPS to make these decisions. After speaking with many of our investors on a regular basis, they share my view that it is not the time to be chasing return by increasing the risk.
This trust that our investors put in us, means we can deliver meaningful distribution rates to investors, while making sure that the interest rates work for our borrowers. We have made changes and implemented new technology that allows the process to be more efficient, which means we can keep our investors satisfied without having to raise borrower rates. GPS has a long history of not increasing interest rates to borrower’s mid-term.
As the financial landscape shifts, GPS will continue to work with borrowers to tailor a funding package to assist them to navigate these uncertain times. This can include no, or reduced pre-sale levels, prompt payment of progress draws, payment of some deposits etc. While funding for a residential development project is only one factor in the project, GPS will, as always, be part of the solution and not part of the problem by increasing interest rates in the foreseeable future.
If this more stable interest rate approach appeals to you, please reach out to our lending team on either 1800 999 109 or lending@gpsinvest.com.au.
You can also call Managing Director Richard Woodhead directly on 0427 574 246.
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