Subprime lending to make a comeback for foreign apartment buyers

Font size :
Wealthy private investors and rich-listers are looking to establish a fund that will lend to foreign apartment buyers left stranded by banks' lending bans, but only on a first-mortgage basis.

"We expect some high level of angst among the developers going through their settlements with high exposure to foreign buyers," said David Farquhar, associate director of private company Seymour Group, which plans to establish such a fund. "We would only look at first-mortgage lending—for any form of property—where the risks are low."

Banks are pulling out lending to both apartment investors and developers in the face of new development and rising building costs. Foreign buyers are also slapped with increased state taxes. Offshore and local investors are also experiencing a funding gap as banks revalue off-the-plan units approaching settlement, leaving many below their purchase price.

According to Deloitte Real Estate partner Damian Winterburn, he is aware of at least two separate funds established within the past month by wealthy private investors to fill the funding gap. These funds were targeting foreign buyers looking to borrow 60 to 70 per cent of the purchase price. They were charging between 8 and 12 per cent.

Former Macquarie Group property head Bill Moss expects Asian banks to bridge the funding gap in Australia through subprime lending. However, he laments that the timing might be a little too late.

"This has been done too late in the cycle; it should have been done three years ago," he said. "At some stage, there will be a problem in the apartment market. There is the risk of a crash and the construction of new buildings will stop."

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

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

Sunday, Sep 24, 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