tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Wednesday, May 29th, 10:05PM

Mortgages

rss
Latest Headlines

Where lenders want to put their money

New research shows seventy per cent of bank and non-bank lenders prefer funding industrial developments above all other property assets.

Monday, November 13th 2023, 10:05AM

by Sally Lindsay

CBRE’s latest lender sentiment survey shows this is true even for non-bank lenders that typically focus on the residential sector.

Industrial is the most preferred for both construction and investment lending. However, lenders are most overweight in build-to-sell residential and most underweight in industrial, the market sector which has the healthiest property fundamentals.

CBRE research head Zoltan Moricz says it is notable that several non-bank lenders, whose focus is residential development or subdivision lending, want more exposure to industrial development lending. 

Twenty lenders took part in the survey (seven international and 13 domestic) comprising three banks and 10 non-bank lenders.

More than twice as many lenders want to grow their loan book as those wanting to shrink, but their appetite is lower for construction compared to investment lending.

Despite preferring industrial deals, non-bank lenders are keen on residential construction loans with townhouses and land subdivision preferred to apartments. Subdivision lending was most favoured by only three of 20 lenders.

For residential lending appetites there are clear distinctions between housing types between townhouses, placed by 47% of lenders in their top two asset classes for construction lending, and apartments, cited by 18% in their top two. The appetite for build-to-rent appears to be limited.

Debt coverage

Local banks have a fairly low appetite for residential construction lending but the other lenders continue to seek exposure. They are wanting higher barriers to entry though as the challenge of attracting residential sales grows. Two major Auckland developments have hit the wall in the past month – two blocks to Takapuna apartments being put up for mortgagee sale and an international bank calling in loans on units at a Browns Bay complex.  

All survey participants want higher barriers, with local banks wanting the highest – 100% of debt covered. Non-bank lenders have increased their requirements and only a small number remain comfortable with sub-50% cover.

Generally non-bank lenders are seeking 50% cover as a minimum.. A road map, marked by key milestones, is then required to ensure 100% of debt cover by project delivery.

Loan to cost (LTC) and loan to valuation (LVR) ratios have also been impacted, however, not to the same extent as presale requirements.

Banks continue to be comfortable at a maximum of 70% LTC. Non-banks are comfortable to consider up to 90%. A few lenders have been happy to consider 100% of cost cover, but only for deals that typically had stronger equity margins in  the valuation or net realisation.

Debt cost

The cost of debt is expected to increase with three quarters of lenders indicating moving to higher margins. This is likely to be influenced by higher risk margins and may also reflect lower liquidity for some lenders, the survey shows.

While the view on margins is largely unanimous between domestic and international, and bank and non-bank lenders, LVR and hedging requirements vary.

International banks are the only ones with hedging requirements in the 55% to 75% category, with domestic banks more often in the 25% to 45% range. Reflecting their lending strategy and loan books, non-bank lenders operate in the 0-25% range typically.

The LVR capacity of non-bank lenders tends to be 60% and above for both domestic and international. The existing LVR requirements of international banks are typically slightly higher than for domestic banks.

Tags: CBRE

« TAP hoping to pick up new business with big discount Mortgage advisers dominate ANZ's new home lending »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 ▼7.65 ▼7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 ▼7.84 7.35 ▼6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - ▼7.24 6.75 ▼6.39
Median 8.64 7.19 7.27 6.65

Last updated: 28 May 2024 11:21am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com