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Record volumes of commercial lending were written by FAST brokers in the September quarter, according to the aggregator, with smaller lenders leading the way.
During the September quarter, the combination of commercial and asset finance settlements under FAST Group surged to a record figure of $1.71 billion dollars during the September quarter, according to the aggregation group’s latest Business Lending Index.
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The dedicated quarterly report, which explores the third-party/broker business lending environment, noted that this figure reflects a 27.3 per cent increase compared to the June quarter.
Compared to the same quarter last year – a period defined by declines in commercial and business lending – this new figure accounts for a 46.1 per cent increase.
However, this record figure was distinctively defined by commercial and business loan lending, accounting for a figure of $1.55 billion during this quarter – a 30.4 per cent increase compared to the June quarter, and a 47.6 per cent increase year-on-year.
The report noted this includes commercial investment and owner-occupier property as well as construction/development, and working capital.
Asset finance over the September quarter marked a figure of $160.45 million – a 4 per cent increase on the previous quarter and a 32 per cent rise to 2020.
As per the report, asset finance and equipment lending – such as cars/light commercial vehicles and yellow goods – have been directly impacted by supply chain disruptions, notably how a shortage of semiconductor chips is lengthening the delivery times of new vehicles.
By state, NSW dominated commercial lending, accounting for 49 per cent of this past quarter (a figure of $601 million, marking a 45.2 per cent growth year-on-year), with Victoria next at 24 per cent ($368 million and 12.2 per cent year-on-year).
Asset finance was a more equitable figure, with Victoria reflecting 29 per cent of lending activity ($46 million and 58.6 per cent year-on-year), followed by Queensland at 27 per cent ($43 million and 59.3 per cent year-on-year), and NSW at 21 per cent ($24 million and -20 per cent year-on-year).
Fast Group managing director Stephen Moore said: “The appetite for commercial property has been strong, especially for assets housing tenants and businesses that have been exempt from lockdowns.
“Warehouses, strata light industrial and petrol stations are among the properties that have become prime assets over the last 18 months.”
Rise of the smaller lender
While this quarter is largely defined by increasing settlement figures, it also heralded growth in smaller lender activity.
According to this latest Business Lending Index, smaller lenders’ share of FAST Group’s total – which accounts for non-big four lenders – over the September quarter settlements was 42.1 per cent – reflecting $720.72 million.
But despite larger lenders again reporting greater settlements, this smaller lender figure is an increase from last quarter’s figure of 30 per cent, and a year-on-year growth of over 105 per cent.
Comparatively, larger lenders have only reported a year-on-year increase over the same period of roughly 21 per cent.
“Smaller lenders have promoted their faster turnaround times at a time when larger lenders have experienced bottlenecks in assessments due to rising demand and increased policies,” the report stated.
“The rise of fintechs, neobanks and specialist lenders – the majority of which are utilising data to drive quicker outcomes – has provided brokers’ customers with increased alternatives and options to meet their individual needs.”
Mr Moore later added: “The market has been exceptionally competitive, with properties transacting on tighter yields every month.
“There has been an increase in smaller and non-bank lenders looking to build market share. We’ve seen a rise in new products and investments by lenders in tech and resources to sharpen their turnaround times to appeal to commercial clients.”
Brokers expecting commercial wave to continue
The report is a sense of optimism surging throughout brokers, namely around the “appetite for commercial property investment and refinancing” – with 52 per cent of the brokers surveyed by FAST Group in June expecting to write an increased volume of deals in this sector.
According to Loan Market Group, the said survey explored the perspectives of 176 FAST Group members, including brokers as well as loan writers and business owners.
While only 16 per cent of respondents noted that owner-occupier purchases accounted for a share of their activity, almost half (45 per cent) of the brokers involved in this survey believe there will be growth in this sector over near future, while 80 per cent predict a rise in finance for business acquisitions and growth “in the immediate term”.
The report also noted despite supply chain delays impacting new car delivery, 48 per cent of brokers anticipate car and light commercial lending will be part of the wider economic recovery.
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