The partnership will offer La Trobe investors 250 Qantas points for every $1,000 invested in the group’s 12 Month Term Account, which as at Friday, was earning a variable rate of 4.5 per cent per annum after fees (the rate is reviewed each month and is not guaranteed).
The Qantas rewards scheme will apply to eligible investments of $10,000 or more.
La Trobe Financial president and chief executive Greg O’Neill said the group was “thrilled” to be partnering with an iconic brand.
“We’re always looking for ways to bring more value to our 45,000 retail mum and dad investors. Our partnership with Qantas Frequent Flyer is part of that,” Mr O’Neill said.
La Trobe is a diversified wealth manager with $11 billion in assets under management. In 2017, investment giant Blackstone acquired an 80 per cent stake in the group.
La Trobe now has 400 staff across Sydney, Melbourne, Hong Kong and Shanghai.
They are one of the best priced SMSF lenders.
How SMSF loans are more risky given below 70% LVR, compulsory and voluntary super contributions on top of rents. Plus personal guarantees. Can’t see too many losses from those loans.
What happens if an SMSF borrower loses their job and/or their tenant, and the super fund can’t meet the repayments?
Does the lender foreclose on the property and wipe out the borrower’s superannuation? Do they call in the personal guarantees and force the borrower to forego Xmas presents for the kids and/or sell the family home? In any of these situations there’s a high chance it will find it’s way to the media, and political pressure will be brought to bear on the lender forcing them to accept a big haircut.
That’s why most of the mainstream banks backed away from SMSF lending. It’s not due to commercial risk. It’s due to reputational/political risk that can end up costing much, much, more.
And heaven help any licensed adviser who recommended it. They will be hung, drawn, and quartered by ASIC.
Of course banks don’t have poor quality loans…lol. And the big 4 banks lend at 7% pa business rates & 20% credit card rates, and pay their customers 0.5% pa, robbing them blind. You would be surprised who borrows in this end of the market, and how healthy it is. If a loan falls over, the property is sold and the 60% LVR is easily achieved. ANZ is only talking about moving to 70% LVR this week (for some suburbs), and most banks have been running on over 90% LVR, which is far riskier. Anyhow, if you can’t handle this space, stay with your low performing bonds & FTDs…lol.
Look, if interest rates are ~2 to 2.5% for a fixed mortgage at a bank and this thing offers 4.5% and is solely invested in mortgages – what are the customers paying?
If someone has a 4 or even higher in front of their mortgage interest rate they must be of pretty poor credit quality or they don’t have the income to support a vanilla mortgage.
Maybe overseas money?
The borrowers are typically paying 6%+. They’re not necessarily from overseas. Most are high risk local borrowers such as small business owners with no track record, or people with prior impairments.
This sort of product does highlight why the term “risk profile” is so misleading and inappropriate for consumers. Under a traditional “risk profile” framework, this product would supposedly suit conservative investors as it is low volatility. But the actual risk of permanent capital loss is probably higher than for a diversified share fund.