BC Securities – a Melbourne-based asset management, corporate advisory, and real estate finance platform – has just launched one of Australia’s first 25-year foreign buyer mortgages for the settlement of apartment purchases. The product was launched with support from Hong Kong-listed Far East Consortium (FEC).
FEC, which is building luxury apartments at West Side Place and the new Ritz-Carlton in Melbourne, will refer clients to BC Securities.
BC has sourced more than $700m to lend to foreign buyers of Australian property. About $500m was secured from a warehouse lending facility with a foreign investment bank and $215m was raised in a debenture issue.
“Our estimate is that there is significant un-met demand from non-residents of Australia for fair and equitable loan products to assist the settlement of their apartments, most which have been purchased off-the-plan,” David Hinde, managing director and co-founder of BC Securities, told The Australian Financial Review.
The firm estimates that non-residents have committed to purchasing more than $20bn of Australian real estate, and many of these settlements will be due over the next 18 months.
After the Big Four curbed lending to foreign property buyers last year, private lenders began stepping in to provide financing. This, in turn, has reignited Chinese interest in some of Australia’s hottest property markets, particularly Melbourne.
However, most loans offered by private lenders are stop-gap short-term loans of about three years, and are designed to give foreign buyers time to look for a suitable mortgage.
While banks are concerned over foreign buyers’ ability to service their loans, BC Securities and other private lenders said many of their target borrowers have strong credit histories, with some settling their purchases with cash.
BC Securities will charge rates from 6.8% to 7.8% at a maximum loan-to-value ratio of 70%.
“Our target portfolio LVR is well under 65 per cent. We reward borrowers for choosing an LVR below 60 per cent with a 1 per cent reduction in the interest rate,” Hinde said.
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