Non-bank settlements surge on back of major bank crackdown

by Julia Corderoy23 Aug 2016
Non-bank commercial lender Chifley Securities has posted record levels of lending for FY2016, following the major bank crackdown on funding property development. 

Over the 12 months to June 2016, Chifley Securities settled more than $600 million and Chifley Securities’ director Joe Morello said the boost in demand is coming from commercial and residential property developers who do not fulfil the major banks’ new, tighter requirements of pre-sales and added security.

“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,” Morello said.

“We are providing finance for pre-sales guarantees of 65% of total sales, bridging the gap that has opened up as the major banks have squeezed projects with a strong component of foreign sales.”

The surge in demand even prompted Chifley Securities to launch a property development division, whose clients are now financing 15 projects worth $208 million in loans, mostly covering medium density residential developments in Sydney’s western region, as well as Melbourne and other major cities.

Morello said the financial year had seen a surge of private equity, hedge and superannuation funds chasing higher returns of more than 10% from property finance through non-banks like Chifley Securities.

“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,” Morello said.

“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.”