Frozen loans produce property funding problems

Font size :

The tougher borrowing rules for Australian property investors are taking their toll as thousands of investors are struggling to complete their purchases.

According to local and overseas mortgage brokers and financiers, the funding of Chinese clients from Australian banks have been frozen, leading them to face foreclosure or exorbitant interest rates from private financiers. Likewise, local clients are also having their settlements deferred by three months to find alternative funding.

“All the deals have been frozen,” said Mark Yin, an agent at Shanghai-based Home Tree Group. “We are now looking for finance all over the world.”

Marshall Condon, chief executive of mortgage broker Neue Black, also has the same sentiments. “In the next three to 12 months, many investors will be applying for funding to complete their deals. However, they will become increasingly concerned as they discover funding is limited,” he said.

Billions of dollars have been invested in high-rise apartments in Melbourne, Sydney, and Brisbane. Many of them have been sold off-the-plan, which requires a second valuation and financing commitments by the lender. However, lenders have slammed on the breaks after loan application spot checks revealed widespread fraud, especially among mainland Chinese buyers, which account for about half of the deals.

As a result, some groups have stopped dealing with Australian properties. Other sought finance from newly established mortgage funds, but they were charging high interest rates of between eight and 12 per cent.

“We are reluctant to take on new clients unless they have 100 per cent of the cash for a property,”said Scott Kirchner, manager of Bella Resident in China. “But then there’s the issue of how do they get the money out of China.”

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Friday, Sep 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords