This article originally appeared in Australian Financial Review
Real Asset Management has “stepped into the breach” created by the major banks’ retreat from mortgage lending after securing a $500 million funding line from a global investment bank to lend to local and overseas borrowers.
RAM, which is led by former UBS investment banker Scott Wehl, will offer housing finance through its subsidiary Brighten Home Loans with a focus on high net worth individuals seeking higher loan amounts and non-resident borrowers seeking house and land construction finance.
Mr Wehl said the aim was to aggressively grow Brighten’s home loan book to around $2 billion within two years via an “institutional standard securitisation program” and using mortgage brokers as the main distribution channel.
The focus will be on lending to non-resident borrowers, especially those in Asia, as well as Australian residents who have been “orphaned by Australian banks due to tightening lending rules and credit restrictions”.
“We have a diversified range of funding sources and we’re talking to more funders. We’re looking to supercharge our growth,” Mr Wehl told The Australian Financial Review.
Brighten will offer principle and interest loans at 4.99 per cent to non-resident borrowers and interest-only loans at 5.35 per cent up to $2 million with a minimum 20 per cent deposit. It will also accept loan applications from Australian residents who meet its lending criteria.
Launched a year ago, Brighten Home Loans is writing about $40 million in loans per month with construction finance a big component of new originations.
Brighten business development manager Mikai Ning said the firm was working to extensively increase its broker network and was hiring more staff, including those with North Asian and other language skills to manage significantly increased demand.
Demand for alternative lenders to the major banks, who control more than 80 per cent of the housing finance market, has been growing since Westpac, CBA and ANZ all lifted their standard variable interest rates in the past two weeks, citing higher funding costs.
At the same time the mortgage funding investment market, which froze following the GFC, has opened up with the likes of prominent non-bank lenders FirstMac receiving positive ratings for its residential mortgage-backed securities.
Others active in mortgage lending include real estate financier Qualitas which backed peer-to-peer mortgage lender Peer Estate.
“The mortgage market is so big and the Big Four dominate so much that one small move creates opportunities for non-banks,” said RAM Australia CEO Scott Kelly.
“It’s a nice feeling for us to get global endorsement [for our mortgage lending].” RAM did not disclose who is providing the $500 million warehouse facility.