Mortgage Ezy steps in for foreign buyers
With banks pulling back from the market for foreign lenders, non-bank lender Mortgage Ezy has announced a new pool of funding specifically for foreign property buyers.
The lender has announced a $500 million commitment of warehouse funding for non-resident property buyers, the Australian Financial Review has reported.
“It will be the first of its kind in that the whole pool will be only for non-resident borrowers, and there is strong evidence to suggest that a bond such as this will have strong investor interest and will be securitised,” the lender’s founder Peter James said.
According to the AFR, around $100 million of loans to foreign buyers have been approved since February, and James estimated the size of the foreign lending market in Australia at around $1.5 billion per month. He predicted the lender’s $500 million earmarked for foreign buyers would be exhausted within three months.
The AFR reported that Mortgage Ezy will apply strict lending criteria to foreign buyers. Loans will be capped at a 75% loan to value ratio, and borrowers will not be allowed to have purchased more than 10% of a building. Borrowers will also be required to have enough funds in either a local or overseas bank, and have been granted the correct visa class. Only properties in capital city metro areas will qualify.
James argued that foreign buyers were crucial to the Australian property market.
“If foreign buyers left, they may cause a slump in property prices and confidence in the market overall. In addition, our reputation in Asia will be severely damaged,” James told the paper.