12 trends of Christmas: Commercial lending

by Rebecca Pike20 Dec 2018

Data from CoreLogic demonstrates that the number of residential mortgage brokers who also offer commercial finance products more than doubled in the last two years (see graph at right).

Further, the value of commercial loan settlements increased to just under $9bn for October 2017 to March 2018. In the September 2017 quarter, a mere 17% of all commercial loans were written by a broker.

Looking ahead, Peter Vala, Thinktank’s head of sales and distribution, says, “The investment outlook will maintain the already sound momentum in commercial property for the next year or two at least.”

However, not everything is certain, with finance supply likely to be squeezed over the mid-term.

“We are expecting the banks to remain on a conservative footing, non-banks to step further into the space, and broker penetration in the commercial market to continue to lift. All in all, conditions should offer plenty of opportunity,” Vala adds.

La Trobe Financial’s chief lending officer Cory Bannister, reports heightened activity in the sale of industrial properties and office space in 2018.

Looking to 2019, he anticipates a continued increase in commercial property purchases as investors chase the “super yields” that can be achieved as the residential market cools.

“We are receiving strong demand as borrowers look to exit lenders with ongoing performance hurdles, in order to achieve certainty to their funding future. We have recently reduced our interest rates on this product in recognition of its strong performance and therefore expect to see a significant uplift in activity in the coming 12 months.”