Invest
Why it’s worth capitalising on credit during COVID-19
Noting the opportunities for investors that arose out of the GFC, an investment manager is lauding the non-bank lending sector as a suitable option for individuals looking to capitalise on the COVID-19-crippled economy.
Why it’s worth capitalising on credit during COVID-19
Noting the opportunities for investors that arose out of the GFC, an investment manager is lauding the non-bank lending sector as a suitable option for individuals looking to capitalise on the COVID-19-crippled economy.
Speaking on an upcoming episode of nestegg’s Meet the Manager series, Mayfair 101’s managing director, James Mawhinney, said the current situation “is a great opportunity for a lot of investors to potentially reposition their portfolio more towards those organisations that are focused in the non-bank lending space”.
“There’s definitely going to be a lot of big opportunities in there for the foreseeable future,” he predicted.
Explaining why, Mr Mawhinney said that when the GFC did hit, “one of the first things that happened was the banks were forced to tighten their lending policies”.
“That obviously opened up significant opportunities in the non-bank lending space,” he continued.
“If you fast-forward to where we are in 2020, interest rates are at historic lows: I’d suggest with all the new money that’s being pumped into the economy, there will be an oversupply of cash.”
According to the managing director, it is the oversupply of money that is “ultimately really driving down interest rates”.
“We’ve already seen interest rates go negative over in various European Union countries, and I think that now the government is pumping even more cash into the economy, there’s a high probability that interest rates will go even lower.”
As a result of banks stepping away from lending and interest rates dropping, Mr Mawhinney has predicted that “what that’s ultimately going to do is that there’s obviously going to be a much bigger margin in there now for the non-bank lending space to really take off.”
With the value of mortgages that have now been deferred “in the vicinity of $200 billion”, banks will be “licking their wounds a bit off the back of the COVID-19 crisis”, he added.
The managing director is of the belief that the non-bank lending space “is really going to take off, simply because the credit gap is just going to continue to get bigger”.
“There’s about an $80 billion credit gap in Australia pre-COVID. I hate to think what that credit gap is now in Australia, let alone other countries.”
Overall, Mr Mawhinney believes the overriding principle to combat against events like what we are experiencing with COVID-19 is the “age-old” principles of diversification.
“The real key to weathering an economic crisis such as COVID-19 is to make sure the investment strategy of the individual investor, let alone those that they choose to invest with, is heavily diversified,” he advised.
About the author
About the author
Economy
New Zealand reveals travel bubble arrangement with Australia
New Zealand Prime Minister Jacinda Ardern has announced that the country will begin a quarantine-free travel bubble with Australia within a fortnight. ...Read more
Economy
RBA reveals April cash rate call
The Reserve Bank of Australia has made its April call on the official cash rate, following its decision to cut the rate to a record low in November. ...Read more
Economy
Melbourne closes in on Sydney’s population growth
Melbourne is hot on the heels of Sydney’s population growth, as it inches closer to taking over as the country’s biggest city since Sydney established itself as the most populous back in the early...Read more
Economy
NAB’s neobank acquisition gets ACCC green light
NAB has been shown the green light to complete its acquisition of Aussie neobank 86 400 in a $220 million deal. ...Read more
Economy
PM reshuffles cabinet to raise the role of women
Prime Minister Scott Morrison has announced a new cabinet as part of a reshuffle aimed at resetting the gender debate that has ensued as a result of a string of recent scandals. ...Read more
Economy
Economic recovery to slow, job losses set to rise
The Treasury department believes the economic recovery from the COVID-19 pandemic will be moderate, while job losses will rise when the JobKeeper subsidy ends. ...Read more
Economy
Post-JobKeeper stimulus with focus on tourism announced
Australian travellers will be offered half-price flights following the federal government’s announcement of a $1.2 billion stimulus package to support the domestic tourism sector. ...Read more
Economy
Women and COVID: Where men glow and women suffer
Not only have women been at the frontline of Australia’s response to the coronavirus pandemic – nearly four in five workers in health care and social assistance are women – but they’ve borne t...Read more
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
The continued property boom, ethical investing and engaging with your super fund
Listen now
Economy
New Zealand reveals travel bubble arrangement with Australia
New Zealand Prime Minister Jacinda Ardern has announced that the country will begin a quarantine-free travel bubble with Australia within a fortnight. ...Read more
Economy
RBA reveals April cash rate call
The Reserve Bank of Australia has made its April call on the official cash rate, following its decision to cut the rate to a record low in November. ...Read more
Economy
Melbourne closes in on Sydney’s population growth
Melbourne is hot on the heels of Sydney’s population growth, as it inches closer to taking over as the country’s biggest city since Sydney established itself as the most populous back in the early...Read more
Economy
NAB’s neobank acquisition gets ACCC green light
NAB has been shown the green light to complete its acquisition of Aussie neobank 86 400 in a $220 million deal. ...Read more
Economy
PM reshuffles cabinet to raise the role of women
Prime Minister Scott Morrison has announced a new cabinet as part of a reshuffle aimed at resetting the gender debate that has ensued as a result of a string of recent scandals. ...Read more
Economy
Economic recovery to slow, job losses set to rise
The Treasury department believes the economic recovery from the COVID-19 pandemic will be moderate, while job losses will rise when the JobKeeper subsidy ends. ...Read more
Economy
Post-JobKeeper stimulus with focus on tourism announced
Australian travellers will be offered half-price flights following the federal government’s announcement of a $1.2 billion stimulus package to support the domestic tourism sector. ...Read more
Economy
Women and COVID: Where men glow and women suffer
Not only have women been at the frontline of Australia’s response to the coronavirus pandemic – nearly four in five workers in health care and social assistance are women – but they’ve borne t...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
