Non-bank finance group Chifley Securities has boosted its direct lending to property developers and has lent $168 million to residential groups over the last six months as banks tighten up.
Chifley is expected to further expand its lending activities in residential property as the Sydney and Melbourne markets cool and presales slow over the next two years.
Chifley Securities principal Joe Morello said direct lending to developers was still a small component of its overall lending through brokers of $626m and it expected strong growth in coming years.
“The combination of tighter controls of the top-tier lenders, which are currently under intense scrutiny at the royal commission, and the cooling property market will inevitably increase demand for noncomplying loans from operators like Chifley”, he added.
Most demand is coming from developers who have received approvals but cannot meet the prohibitive 70-100 per cent debt cover required by the major lenders to get funding for projects.
More developers are also seeking funding from noncomplying lenders as they are stuck holding residual apartments that have not sold or settled.
Shifting into direct lending to developers follows last year’s launch of Chifley’s aggregation division for brokers who can’t access funding from the major lenders for their clients. Chifley Aggregation, which provides brokers access to more than 145 lenders, has posted lending of $285m over the last six months.
