Powered by MOMENTUM MEDIA
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.

First-tier lenders regaining appetite for commercial loans

matthewjohnsonweb

matthewjohnsonweb
Reporter 2 minute read

Mainstream lenders are increasingly coming to the table to service commercial clients following a prolonged period of inactivity, according to a Sydney-based broker.

Speaking on The Adviser’s Elite Broker podcast, the managing director of Sydney-based brokerage Simplicity Loans & Advisory, Matthew Johnson, noted the recent shift in appetite for commercial lending among first-tier lenders.

Mr Johnson said that over the past three years, commercial loan applications had been “constantly falling outside” the risk appetite of established banks and into the hands of second-tier lenders.  

“[Deals] were sitting outside of what the banks were happy to write and were sitting at that next tier down from the banks at slightly higher pricing, [a] slightly higher risk curve, and more relaxed lending conditions,” he said.

However, the Sydney-based broker observed that over the past six to eight months, deals have increasingly started to “fall back within the bank appetites”. 

“There wasn’t necessarily one thing bringing them all [back], and I don’t necessarily think it was the banks going back out there looking for more business – although there’s an element of that – but we just found that a lot more clients were sitting back within what a bank was willing to write,” he continued.

Mr Johnson largely attributed the rise in demand for commercial loans from first-tier lenders to the broader rebound in the property market, which he said has triggered a rise in pre-sale volumes for developers.

“In the construction segment, [what] we’ve found is that with the improving residential markets, particularly in Sydney and Melbourne, is that pre-sales for developers have started to come back a bit more,” Mr Johnson added.

Advertisement
Advertisement

“[I] think that was something that was taking a lot of deals outside of banks for the last couple of years, where they wanted maybe 100 per cent debt cover with pre-sales, whereas the non-banks were happy to take a lower level of pre-sale cover.”

According to Mr Johnson, the resurgent appetite for commercial loans among established banks would produce better outcomes for borrowers.  

“It shows that for borrowers, if we can access major banks more often than not, they’re going to get cheaper funding and a lower interest cost, provided the terms are right,” he said.

“For developers, if they can get those pre-sales away, it means they can access cheaper funding and allow them to make more money on their project.”

The observation comes as major bank, CBA, announces additional resources to commercial loans in a bid to help small businesses access finance.

PROMOTED FEATURES


To hear more from Matthew Johnson, tune in to The Adviser’s Elite Broker podcast.

[Related: How this broker runs two commercial businesses]

First-tier lenders regaining appetite for commercial loans
matthewjohnsonweb
TheAdviser logo
matthewjohnsonweb

 

more from the adviser
handshake men AFG partners with MAB in joint venture

Major aggregator Australian Finance Group is set to become the jo...

scales justice ta ASIC takes short-term lenders to court

The corporate watchdog has commenced proceedings in the Federal C...

Tax sign Victoria SME grants now income tax free

Grants provided to small businesses under the Victorian governm...

FROM THE WEB