Offshore banks filling the gap for foreign property buyers
Moves by major banks to curb foreign lending may not dampen overseas investment in Australian real estate.
The Australian Financial Review has reported that Chinese banks with retail lending capabilities in the Australian market are stepping up to fill the gap left by Australian major banks which shut down lending to foreign investors. The report has named HSBC, Industrial and Commercial Bank of Chine and China Construction Bank as lenders looking to maintain or increase their business flows from foreign buyers or buyers with foreign incomes.
The claim comes after ANZ, Commonwealth Bank and Westpac all said they would stop lending to offshore buyers or buyers reporting only foreign income.
CBRE agent Mark Wizel told the AFR foreign apartment buyers in Melbourne have shown increased interest in new developments, and have been able to secure funding from Chinese banks.
"It is now very clear why ICBC, Bank of China and China Construction Bank all opened retail branches in the best streets in the Melbourne CBD and Sydney CBD. They foresaw the potential challenges that Australian banks would face in lending to offshore apartment buyers,” Wizel told the paper.
Sources told the AFR Bank of China is also maintaining its foreign lending, but with an added degree of caution. They cited a source close to the bank who said the bank was still looking to lend, albeit with high prudential standards.
"They are not rushing to fill the gap, but will be cherry-picking some of the better quality applications for their books,” the source said.