Finding yield in Australia is tough right now, with 10-year bond rates and the Reserve Bank’s benchmark interest rate both at record lows.
How low is low? Well, 10-year bonds are yielding under 2%, while term deposits are generally paying under 3%.
Superannuation can also offer low returns. In late March, both APRA (the superannuation regulator) and ASIC (the financial services regulator) warned about underperforming funds. There are a lot of dud funds, the regulators said, and they might be forced to close.
So finding yield is tough.
We are able to provide net returns of 6-12% p.a.
Finding yield may be tough ‒ but it’s not impossible.
There’s one reputable class of investment that’s delivering net returns of 6-12% per annum. It flies under the radar, because it’s often only available to sophisticated and wholesale investors.
Credit Connect Group has provided an average return to its clients of 11.2% since 2006.
This class of investment is often referred to as peer-to-peer lending, which Credit Connect Group has facilitated for its clients for more than a decade.
Let’s explain how it works.
Imagine a borrower wants to purchase a property, either residential or commercial but they struggle to obtain finance, perhaps because banks are imposing tighter lending restrictions, they may have no option but to look for alternative funding sources.
That’s where Credit Connect Group can be of service. Credit Connect Group connect borrowers like these with private investors who wish to invest in private mortgages. By taking on the role of a Credit Connect Group ‘Lender’ investors have potential to earn net returns of 6-12% per annum.
How are good returns on Credit Connect Group investments possible?
There are two main reasons.
First, our borrowers are seeking alternative funding solutions at commensurate interest rates.
Second, our borrowers are typically seeking short-term solutions, so their primary concern is successfully obtaining timely finance rather than the interest rate applicable to the loan. Credit Connect Group offers loans for up to three years in term. Borrowers are able to use Credit Connect Group as a pathway to enter the market, before refinancing into longer term funding solutions.
We follow rigorous credit criteria
Don’t make the mistake of equating high returns with high risk.
Credit Connect Group undertakes five important steps to minimise the chance of non-performing loans.
First, we review all applications. We set the bar high. Any applications which fall below standard are declined.
Second, we impose a maximum LVR of 65%.
Third, we require real property security. Investor funds are secured via a registered mortgage against the borrower’s real property. Where the applicant is a commercial entity, investors are also entitled to director’s guarantees.
Fourth, investors have the option to select which loans they wish to fund.
Fifth, we assist investors perform their due diligence by sharing all the key details relative to the loan transaction, including the borrower’s profile, credit history, the property’s particulars such as address and value, the term of investment, interest rate and potential return.
Our track record is strong
Credit Connect Group has the right formula. Since 2006, more than $300 million of loans have been facilitated by the Group, delivering a weighted average return of 11.2% per annum.
When you combine an experienced leadership team with rigorous credit criteria, you get positive results.
Finding yield in Australia is tough right now ‒ but it’s not impossible.