Investors frustrated by low interest rates are increasingly turning to investments via property mortgages to secure higher income, Alpha First Securities claims.
Alpha First Securities director Olivia Fraser said the firm has seen a 25% increase in the past six months of investors wanting active investments in the property mortgage field.
Two years of tight bank credit means there’s now a large number of very good property investors and developers banks are no longer extending credit to, Fraser said.
She added that land developers, who are trying to meet rising demands for housing, are flocking to non-bank alternatives for support and there are some very high-quality developments that investors can be matched with.
Bank credit has been incredibly tight for the past two years and the banks are turning away what have previously been excellent lending opportunities for them.
“Part of the housing crisis we are currently seeing is caused by this incredibly tight credit market – the demand is there for these homes to be built, but not the loan funds for these developers and house builders.
“The flow-on effect for us is that there are some really sound mortgage investment opportunities now available.”
Investors are increasingly opting for property mortgage investments from the likes of Alpha First Securities which return 8-9%, with interest paid out monthly, rather than the average 3% banks are offering on term investments, often paid annually, Fraser said.
Alpha First Securities has noticed an increase in the number of investors who qualify as “wholesale investors” and who have this “frustrated capital” and who are tiring of the previous four to five years of very low returns from banks, Fraser noted.
“The investors we work with are commercially aware but are only getting modest returns from investments such as term investments, and then only getting paid the interest accrued at maturity. Our clients are actually quite discouraged to have worked all their lives to amass a significant cash asset and are then getting meagre returns.”