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New build financing gap boosts Southern Cross

Peer to peer lender Southern Cross Partners has seen an increase in investor demand as first time buyers struggle to finance new-build properties.

Wednesday, June 6th 2018, 12:04PM

by Dan Dunkley

The lender says it experienced a 10-20% increase in investor demand last year amid a lack of available funding for the construction and sale of new homes.

Southern Cross CEO Luke Jackson says would-be buyers of new homes, often first-time buyers, struggle to secure financing as banks will only lend against completed properties. The lender says builders are reluctant to begin projects without the buyer's financing in place, leaving both parties in a stalemate. 

Jackson says this has created a “mismatch” in the market. He adds: “The banks want a finished house, but the builder needs money to actually build the project. If the building company goes out and buys the land and builds the house, they become a developer and it’s even harder for them to get finance – very few, bar the big turnkey builders like Universal Homes, can do something like that."

Southern Cross says there is growing demand for its "bridge" financing products. Bridge financing provides builders with funds to construct a property, satisfying the banks and enabling buyers to then receive a home loan.

Jackson says a growing number of builders have contacted Southern Cross through mortgage advisers.  Jackson says the demand is driven by increased awareness of P2P lending. “We have built awareness that you can get secured lending using this platform. It is growing by word of mouth and people are learning about it.”

Jackson says peer-to-peer investors are flooding into the market, encouraged by the investment yield on offer. According to Jackson, Southern Cross experienced 10-20% growth in investor demand year-on-year in the 12 months to March.

 

 

Tags: Peer to Peer Lending Southern Cross

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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