The mortgage arm of Hong Kong-based developer Far East Consortium (FEC) has acquired a 53 per cent stake in Australian non-banking lender Mortgageport as part of a strategic partnership.
Mortgageport has provided home loans to more than 15,000 customers and has more than A$1.5 billion (US$1.1 billion) of mortgage assets under management. The deal is expected to unlock the hidden value of FEC’s property and create new revenue streams, according to Chris Hoong, its managing director.
The acquisition, which went through last month, will allow the developer to earn more from the provision of capital, instead of just receiving distributor fees, he said. “This will create a new earning stream for the group and at the same time create avenues to unlock the significant value hidden within the group’s property portfolio,” Hoong added.
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Through this acquisition, BC Invest, FEC’s mortgage arm, hopes to expand in the Australian domestic mortgage market, which it views as an opportunity that banks have not focused on. The Hong Kong-based company, in which FEC holds a 51 per cent stake, provides services such as non-resident mortgages, asset management and accounting. It operates in several countries including the United Kingdom and Australia.
The companies anticipate that the new permanent capital and funding support will allow Mortgageport to triple its assets under management within the next few years, as well as establish it as one of the top three non-banking mortgage managers in the Australian domestic market.
The acquisition by BC Invest is part of a plan to leverage growth opportunities in its existing markets, where it hopes to use its infrastructure and resources to exploit opportunities in Australia’s A$2 trillion domestic mortgage market.
The main purpose of the deal was to assist the growth of Mortgageport’s direct-to-consumer model, according to David Hinde, BC Invest’s CEO. “We have an ongoing position within non-resident mortgages, which will now be supported by domestic mortgages as well,” he said, adding that non-banking lenders accounted for only about 10 per cent of market share in domestic mortgages in Australia.
Overseas property in the UK, Australia and Canada has seen a surge in popularity among Hong Kong buyers according to Eli McGeever, director for research and technology innovation at One Global Labs, the proptech division of One Global Property. And Hong Kong buyers commonly purchase overseas property using mortgage, with those acquiring British property opting for UK banks, while those purchasing Australian property mostly opting for non-banking lenders, he added.
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Hinde said that demand from Hong Kong investors had increased following BC Invest’s launch in the UK. The company launched in the UK Market in September with a £225 million (US$303.5 million) banking facility from Credit Suisse to fund buy-to-let mortgages for non-resident overseas investors.
The percentage of mortgages granted to Asian clients by BC Invest has historically been around 80 per cent, according to FEC. The company expected the number of Asian clients to grow as BC Invest expanded to new markets, with their relative percentage decreasing as they pivot to local Australian clients.
Hinde said BC Invest will continue to service Asian customers through its non-resident mortgages.
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Hong Kong buyers would, however, still prefer to use local lenders if possible, said Kate Chong, the chief operating officer of mortgage referral brokerage StarPro Agency. This was because these firms were easier to approach in terms of language and location, as well as being in the same time zone as the applicants.
Chong said that buyers would only consider overseas lenders if they needed lower interest rates, different payment plans or less stringent approval standards.
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