Building blacklist creates opportunity for specialist lenders: Mortgage brokers
The reluctance by the major banks to lend on apartment developments creates opportunities for “speciality lenders” to step in prudently, according to Mortgage Choice spokeswoman Kristy Sheppard.
Speaking to Property Observer following the leaking of a major bank blacklist of 373 apartment projects that one unnamed bank will not lend against, Sheppard says providing finance where other banks decline is an area a number of lenders can leverage to build their market share.
“Some already are,” she says. “For example, speciality lenders and others who provide ‘alternative verification lending’ often scrutinise a borrower's situation more closely from an individual perspective while still abiding by serviceability rules and credit scoring systems.
“Obviously the balance of risk versus benefit has to be right for the lender and the customer in these circumstances too, but a less restrictive approach is taken when examining each deal,” she adds.
The most recent financial results for Mortgage Choice show that almost a third of its mortgages were arranged by banks outside the Big Four, with 10% of loans coming from non-bank lenders and building societies.
Lisa Montgomery, CEO of Resi Mortgages, says with borrowers now more cautious and lenders tightening criteria and reducing loan-to-value ratios on smaller apartments (between 40 and 60 square metres) there is “an appetite for all lenders to see if there is a deal”.
While the word “blacklist” evokes an emotion, Montgomery says it is prudent for the major banks to limit their exposure and risk on certain medium- and high-density projects.