Investment Fund Ventures Off Beaten Track In Lending

Investment firm Blackstone has investigated offering mortgages directly to the end customer, according to The Australian Financial Review.

The AFR’s Street Talk reported that Blackstone could be taking small steps in Australia to begin lending to borrowers that are shunned by the major banks, having silently inquired into at least one high-rise apartment development, outside of Melbourne's central business district, to focus on.

While it was reportedly unclear if Blackstone was pursuing the Melbourne lending project on its own or in partnership, the AFR, said the firm planned to plug a gap in the market left by the retreat of the large banks, and use the development as a test case to further develop its direct lending plans.

It is an idea centred on the shadow-lending venture aligning with developers, which the AFR reported last month was being discussed in a partnership between Blackstone and investment services firm Ausin Group to assess a direct lending facility, and then then target customers who find it challenging to obtain mortgages from the major banks, including offshore buyers.
The AFR said the partnership had also been in talks with various non-bank lenders around them providing the systems and servicing for the home loans.

It has sparked motivation within bigger players who have discussed the possibility of multi-faceted funding packages like securitisation, after meeting with banks to gauge their views on such a move.

However, the AFR said some banks have not been keen to provide funding because of property exposures with more concentration and risk, which could be the case if there are a large number of borrowers within the same residential apartment who the ventures lend to.