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FMT ticks over $500m in investments

While banks clamp down on lending and restrictions tighten for investors, one non-bank lender has more money to offer than ever.

Thursday, 4 May 2017

Property finance and investment provider First Mortgage Trust has seen its investment book climb to more than $500 million.

It passed the milestone on Monday of this week.

That is up from just under $350m in the year ended March 31, 2016.

Financial controller Roger Ford said the growth was due to the rate of return it could offers its investors.

He said it was typically 2% higher than what was available in six-month term deposits from the banks, which is the rate FMT benchmarks against.

The rate of growth should continue until the official cash rate started to climb again, he said.

But he said the big increase in funds was not what had been expected. “A couple of years ago there was talk of interest rates going up then it flicked to the OCR reducing. I don’t think anyone saw such a long period where interest rates were so low.”

There was also increasing demand for borrowing, he said, as the banks tightened their criteria for property finance and there was less money available from non-bank lenders.

Alan Hitchcock, FMT’s loans manager, said the firm was willing to look at a range of residential deals, and was most concerned about the quality of the property being purchased.

It would favour anything that was bought in the top half of the North Island, from Napier across to New Plymouth north. “That’s the golden triangle, the preferable area,” he said.

It could lend up to about 65% LVR and would offer rates on a case-by-case basis around 7.95%. Deals were normally done for one to three years, interest-only.

It also offers an equity release product.

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