Non-bank reports over $1bn in broker-originated loans

by Miklos Bolza10 Mar 2017
Non-bank finance group Chifley Securities has recorded $1.1bn of loan applications across the 2016 calendar year – its highest ever levels.

Dominic Lambrinos, co-founder of Chifley Securities, told Australian Broker that around 98% of the total number of loan applications originated through the third party channel.

In the second half of 2016, the firm increased its lending to property developers and investors by 140% from the same period the year before.

Chifley now has $880m in current loan applications for projects with loan sizes ranging from $5m to $60m.

The increased demand has emerged because brokers are finding it harder to help commercial and residential property developers fit with tighter lending criteria demanded by the Australian Prudential Regulation Authority (APRA).

“Basel I and Basel II were monitored by APRA but not strongly regulated. By about April last year, Basel III came in, APRA said banks had to comply with it, and then a lot of brokers in the country were finding the banks weren’t able to emphasise one particular area over another,” Lambrinos said.

This meant that banks could not have too many loans in one particular area or locality. Instead they were forced to have a “smoothed out” investment portfolio without any peaks, he added.

“The brokers can’t get things financed for reasons which are not going to be cleared up anytime soon,” he said. “Basel III isn’t going to be reversed so there’s going to be a greater emphasis for people who were normally banking customers coming to the non-bank sector.”

This current lending environment is why such a large proportion of Chifley’s business comes from brokers, Lambrinos said.

However, he expected broker originated loans to decrease to 95% in the coming year as the number of direct clients to the firm increases.

With around 10,000 brokers currently on its mailing list, Lambrinos noted that approximately 110 brokers had written loans with Chifley in the 2016 calendar year. This increased from around 60 at beginning of January last year.

Chifley Securities will be targeting between $1.5bn and $2bn of loans throughout this year.

“We’ve got the capacity to do it,” he said. “We spend a lot of money here on systems and we’re pretty much all paperless now so it’s quite a unique office to work in. We’ve also had a lot of programs written for us to work in our environment. So I think it’s a doable goal.”

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