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$75m on offer for new developments

Auckland ’s long-term future is sound as well situated residential developments will always sell and demand for affordable housing remains strong, a leading non-bank property financier says.

Tuesday, June 9th 2020, 5:15PM

by The Landlord

New Zealand Mortgages & Securities (NZMS), which is largely backed by Mansons TCLM, is so confident in the region’s future that it has announced it has $75 million of new lending available to the residential development sector.

NZMS director James Kellow says while some developers are struggling to get capital, they have plenty for viable projects and they expect the quantum of their lending in the next few years to mirror the past few.

“We’ve received $50.3 million in recent repayments from successfully completed projects and have a further $127.5 million due in from projects near completion. This means we’re ready to fund new projects and remain very confident despite current global circumstances.”

With a lending book of about $200 million, he says NZMS is well positioned to deal with any economic fall-out resulting from the global Covid-19 pandemic.

Kellow says they have lent through the 1987 share market crash and recession and, more recently, the GFC but it was through the GFC they really experienced the resilience of the Auckland property market.

“I was processing loans and meeting with developers right through that period, finishing projects, then starting greenfield subdivisions. As the market improved, it was apartments and townhouses. Many of our clients are counter-cyclical, so when the weaker developers stop - they grow their delivery.”

Auckland’s growth and scale gives them the confidence to lend again despite much wider economic uncertainty.

“Many lenders struggled with loan recoveries in GFC, but these were almost all in provincial areas,” he says. “It is the critical mass of people living in Auckland that provides depth to the market and ongoing demand for better living environments.”

It seems that affordable housing demand remains high – due to high numbers of Auckland buyers wanting to take advantage of record-low interest rates and the removal of the LVR restrictions (which mean lower deposit are possible).

Kellow says they get a particular kick out of providing funding to projects for first-home buyers and are proud of the fact that the developments they have done with KiwiBuild to date have been matched with first-home buyers prior to completion.

That’s why NZMS has given KiwiBuild an undertaking that they will provide approvals on any project KiwiBuild is underwriting within 24 hours of receiving all the high-level information.

“KiwiBuild gets a lot of criticism, but it has given many developers the confidence to get projects off the ground and is getting more people into housing. I would argue that level of support is more important than ever.”

Success with developments is all about backing picking project winners, Kellow says.

“We put our resources, connections, expertise and financial clout behind a developer who has desire, drive, and vision. We love supporting small scale developers into much larger projects than they could otherwise have imagined.”

While they do set a pretty high bar to becoming an NZMS borrower, once on the team their clients become friends, he adds. “We get a huge kick out of not just building homes but creating new communities and shaping Auckland’s future. In that regard, nothing has changed in 2020.”

Tags: affordability Auckland coronavirus Covid-19 demand developers housing market interest rates investment Lending non-bank lenders NZMS property investment real estate supply

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 ▼3.19 ▼3.49
SBS Bank Special - 2.79 ▼2.69 ▼2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 2.79 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 29 June 2020 9:13am

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