Non-bank finance group Chifley Securities has announced that it achieved record levels of lending for the 2015-2016 financial year, lending more than $600 million to a range of investors, builders and property developers across Australia.
The newly-formed group currently has $230 million in loans to projects currently in progress, with loans ranging in size from $1 million to $50 million in first mortgages, mezzanine, bridging and construction finance.
Chifley Securities says it has $1.1 billion worth of loan funding available, and that it is finding strong demand from commercial and residential property developers who do not fulfil the major banks’ new, tighter requirements of pre-sales and added security.
Chifley Securities’ director Joe Morello said: “We are fulfilling a demand from developers who are not meeting the banks’ latest demands for higher pre-sales, especially where the majority of buyers have been foreign.
“We are providing finance for pre-sales guarantees of 65 per cent of total sales, bridging the gap that has opened up as the major banks have squeezed projects with a strong component of foreign sales,” he added.
Mr Morello noted that the financial year had seen a surge of private equity, hedge and superannuation funds “chasing higher returns of more than 10 per cent from property finance through non-banks”.
He also noted that the group continues to attract finance and mortgage brokers, who are referring their clients for both large and small projects. Last year the lender generated more than $2 million in broker fees, all of which were passed on to the referrers.
Mr Morello said: “Private lending groups, including Chifley Securities, are becoming known as the fifth major bank, with more investment funds entering this sector chasing higher returns, while being secured against property projects being financed.
“We provide security to our lenders by being able to step in, where required, to complete developments with our expert property team.
“Despite the historic low interest rates and demand from buyers, the banks are becoming much more difficult to deal with for developments and we see a strong gap in the market for a more pragmatic finance solution”.