In this Special Report we take a look at various areas of commercial lending to shed light on the challenges and opportunities
Over the last 12 months, many finance brokers reported seeing banks and lenders open their appetites back up to commercial lending. Banks and new lenders were coming forward to service more SMEs and property developers. Now, with the current uncertainty, many are beginning to pull back again.
In September 2019, lending to businesses for construction reached its highest monthly figure since 2016, according to figures from the ABS, but by February this year it had fallen by 39%.
In contrast, business finance, including the purchase of plant and equipment, vehicles and other equipment, rose by a little over 5% year-on-year in February.
Figures also show that there are more mortgage brokers now writing commercial loans. The latest MFAA Industry Intelligence Service reports that after two consecutive periods of decline the number of brokers writing these loans has risen back up to the highest level yet.
According to the report, there were 3,670 mortgage brokers writing commercial loans, up by two brokers from the previous high, and an increase of 25% compared to the same period two years earlier.
With a somewhat challenging home loan market last year, this uptick shows that brokers have been looking to diversify their offering beyond residential solutions. As has been the case for the last few years, brokers in NSW/ACT make up the majority of mortgage brokers now writing commercial loans, closely followed by those in Victoria, which had held the lead until 2016/17.
Perhaps reflecting the shift in lender sentiment towards business lending, the value of commercial loans settled by mortgage brokers grew in the six months to September 2019, reaching its second highest value after a decline in the previous six months.
It will be interesting to see in six months’ time what the next lot of figures shows us, as that once-positive sentiment has retreated due to the uncertainty of the coronavirus pandemic. Meanwhile, mortgage brokers should have more opportunities now to seek out and support business customers.
It is highly likely that many mortgage brokers already have customers that are self-employed business owners who need additional support even at the best of times – but now, as the Australian economy faces severe challenges, businesses have been forced to temporarily close their doors and customers have less money to spend. In this report, MPA covers the opportunities that are there for brokers in areas that businesses and investors need help with.
Read on to find out exactly what you need to know about areas such as debtor finance, development finance and unsecured business lending.
