Low LVR product has 20-year terms
Basecorp Finance has established a new commercial mortgage product with one of its key funding partners as it looks to diversify its offerings to encompass all types of non-bank mortgage lending.
The launch signals a further move towards facilitating advisers with varied and diverse commercial products, as more advisers look towards diversification.
“Advisers are the cornerstone of our success,” said Warren Mayall, managing director at Basecorp.
“We understand the need for competitively priced and flexible products that cater to the specific requirements of advisers and their customers.”
“Our new commercial mortgage product offers further tools for advisers to deliver innovative solutions to their customers in this space and is one of the only non-bank commercial mortgage options in the market with maturities out to 20 years”.
Breaking down Basecorp’s commercial product
The product caters to a wider range of commercial product types, including retail, industrial and office. According to Mayall, the focus primarily is “small ticket”, with conservative LVR positions, and there are no ongoing covenants or reviews.
Basecorp chief financial officer John Moody (pictured above) said the product’s interest rates were “broadly in line” with its own residential investment rates, and the offering “will sit competitively with bank floating commercial rates”.
“Maximum LVR is 60% plus fees, which we think is a very competitive proposition for the asset class particularly when combined with 20-year terms with no ongoing covenants or reviews,” said Moody.
“And borrowers will have the option of an interest only period out to three years for most loans.”
This announcement builds upon Basecorp’s growth and funding successes over the last few years as it has built a mortgage book over $1 billion.
Why branch out to commercial assets?
With the commercial finance industry steadily growing amid a multi-speed economy, it presents an opportunity for growth for both lenders and advisers.
Moody said it’s a complementary asset class for Basecorp’s short and long-term residential mortgage offerings.
“Advisers will see a very familiar underwriting approach from us, with a focus on sharp turn around times within 24 hours and pragmatic conditions,” Moody said.
“We’ve talked in the past of being a ‘one-stop shop’ for non-bank residential mortgages for advisers, and we think expanding that to all types of mortgage security is an exciting development for the Basecorp business.”
But while commercial property has been a bank product in New Zealand for some time, Moody said there have been very few long-term options for borrowers originated through advisers.
“We can contrast that with Australia, where there are a range of non-banks there offering small-ticket long-term commercial mortgages in the marketplace and healthy demand from investors for ongoing capital markets issuance,” he said.
“We see real potential for New Zealand, over time, to head the same way, and we think the product positions Basecorp well to assist advisers with new income streams as this market develops.”
