Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Award-winning broker flags surge in non-bank lending

danholden danholden
Francesca Krakue 5 minute read

A successful loan writer has discussed the significant impact on his business of what he sees as a “massive increase” in non-bank funding since the end of 2015.

Dan Holden of HoldenCAPITAL, who this year won the business writers ranking for The Adviser’s sister title SME Adviser, says his brokerage has seen a “massive increase” in non-bank funding of construction loans and a shift in major banks’ lending appetites since November of 2015.

Speaking on the Elite Broker podcast recently, Mr Holden said that his business noticed the change around 18 months ago.

“It was such a massive shift and it was a pretty rough month for us because we had even approved construction loans of $20-$25 million dollars that the bank turned around and said, ‘Sorry, we can't do that anymore.’ It's not very nice when you go to somebody and say, ‘I know you thought you had $25 million, and you've already dug a hole, and there's a big crane on the thing, but the bank doesn't want to do it anymore.’”

Advertisement
Advertisement

“We're seeing the shift in probably two ways. One is that the banks will provide money, but it’s at a drastically reduced LVR, so if you're doing a $20 million project the bank previously would have lent you, say $16 million, 80 per cent of the total development cost. Now they're turning around and saying, ‘We'll lend you 12,’ and that leaves a massive shortage in capital. The second is in pre-sales and just the other terms and conditions that the bank changed pretty drastically,” Mr Holden explained.

Mr Holden added that not only has he seen a reduction in the amount of capital on offer and a tightening of terms and conditions, he has also witnessed some instances where banks “just won’t provide any money”.

“We’ve seen that. Some suburbs have just been blacklisted by all the banks where they just go, ‘No, I won’t touch that suburb even if it's the best deal at a 50 per cent loan to cost ratio with a great guy, I still can't do it.’”

On the other hand, Mr Holden told The Adviser that his business has observed a significant increase in non-bank lending.

“Since November 2015, we've seen a massive increase in non-bank funding. Non-bank funding is really anything outside of the six or seven banks that provide capital to property developers. We have seen a massive influx in non-bank money, and it's interesting,” he said.

PROMOTED CONTENT


The shift impacted how Mr Holden’s brokerage operated.

“It was different… we saw that our effort was to grow the business as a major bank brokerage and be successful by having two-thirds of our volume with the major banks, but then they turned around and not only closed the doors, but drastically reduced their appetite.”

[Related: ]

Award-winning broker flags surge in non-bank lending
danholden
TheAdviser logo

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

danholden

 

more from the adviser
Blake Albones Bank announces new head of home lending distribution

MyState Bank has hired the CEO of RateOne and former NAB head of ...

Sydney Sydney mayor launches business support, calls for JobKeeper

Sydney’s mayor has urged the federal government to resurrect Jo...

mortgage payments money Banks accused of bias against BNPL in lending process

An executive from buy now, pay later provider Zip has echoed repo...