A focus on solutions
lending for commercial
IN Partnership with
Commercial lending is proving resilient as non-bank ORDE seeks to boost service with an emphasis on flexibility and brokers’ knowledge development
More
WHEN NEW non-bank ORDE Financial looked at the lending environment as part of its market launch in 2020, it was clear that brokers wanted more commercial options.
“Brokers were not being supported with solutions where the applicant’s intent was commercial in nature,” says ORDE’s chief lending officer and one of its two managing directors, Ryan Harkness.
“There was a fundamental need for commercial mortgage options outside of the major banks, hence it was critical in our product design and launch strategy phase to have commercial feature as a key pillar within our broad product range.”
Commercial lending is something of a bright spot as the economy enters what looks increasingly like an environment of prolonged higher interest rates. While residential lending has taken a delayed hit since the Reserve Bank started lifting rates in May, the latest central bank data shows that total commercial lending is continuing to grow at a pace of more than 10% a year.
ORDE is a specialist lender focusing on residential, commercial and SMSF and backed by Wingate, a leading investment business and one of Australia’s most successful private property lenders, with more than $11.5bn of financed property transactions. ORDE provides competitive rates with no ongoing fees, comprehensive digital operations and a highly experienced credit team. ORDE’s business team has extensive experience leading and operating Australian specialist lending businesses and uses this experience to implement today's redefined digital technology capabilities, unlocking big improvements and delivering them to broker and borrower customers.
Find out more
Ryan Harkness, ORDE
A changing market
One reason for this resilience is that more commercial properties are being acquired under an SMSF structure for longer-term wealth management planning or to provide a higher level of protection for an asset.
“There’s been a shift recently for SMEs to look at purchasing commercial real estate via their SMSF,” says Harkness.
“Whether it’s been to add diversity to their asset portfolio, purchase rather than rent in the low-rate environment, or manage their cash
Ryan Harkness, ORDE
flows as interest rates begin to rise, SMEs continue to look at commercial via their SMSF, seeing the long-term strategic value in commercial assets.”
With the outlook uncertain for when developments will be completed, more residential assets are now also being held with commercial intent.
“Supply chain issues are causing pricing pressures in future developments, and therefore there’s been a swing to a hold strategy, realising the rental yield until pricing certainty can again be achieved in the future,” says Harkness.
Even developments that are finished are being taken off the market to bank some rental income until a property rebound becomes more likely.
“Many developers who have completed developments also see benefit in retaining stock, focusing on rental yield in the short term until stability returns to the residential housing market.”
Looking at it by business sector, commercial lending is a mixed bag.
According to CreditWatch, the strongest
SME sectors are now healthcare and social assistance, agriculture, forestry and fishing, and manufacturing. These industries are likely to continue to see strong demand, even in the event of lower overall consumer demand, given the essential nature of the goods and services they produce.
Sectors performing less well include food and beverage services, arts and recreation services, as well as education and training. Labour shortages and rapidly rising operational expenses such as logistics, fuel and raw materials costs are making it increasingly challenging for some businesses to trade sustainably.
But weaker sectors experiencing a temporary pinch can provide more opportunity for brokers working with alternative lenders like ORDE, because non-banks are often willing to take a longer-term view of a borrower to help them overcome short-term challenges.
Solutions lending
Harkness says Australian brokers have been very proactive in working with their customers to find alternative lending solutions with longer loan terms and no annual reviews, which give them the stability needed to support their businesses.
“This key trend has continued post the COVID-19 pandemic, and non-banks such as ORDE that have
30-year loan terms with no annual reviews will continue to support those customers looking for certainty going forward,” he says.
This dovetails with ORDE’s emphasis on solutions-based lending.
ORDE offers mortgage solutions backed by commercial or residential real estate where there is commercial intent, whether for business premises, investment or future development, either individually, through a special-purpose vehicle, or via the client’s SMSF.
“Our commercial product was designed to provide a simple, easy-to-understand long-term solution for customers, with no annual reviews – a 30-year loan term available across all products and securities, which also comes with an available full redraw with no ongoing fees,” says Harkness.
“To really help brokers and their clients, we also felt it was important to offer brokers and borrowers access to ORDE’s broad variety of product offering: a full spectrum of specialist solutions across our commercial product range, whether it be on income verification – full-doc, alt-doc or lease-doc – or borrower profile covering tax debt and credit-impaired borrowers.”
Share
Share
News
TV
Updates
Features
Resources
Subscribe
Events
Contact Us
RSS
Conditions of use
Privacy
Terms & Conditions
About us
People
Firms
Key Media
Mortgage Professional America
Which Mortgage
Canadian Mortgage Professional
Mortgage Professional Australia
Copyright © 2022 Key Media Pty Ltd
News
TV
Updates
Features
Resources
Subscribe
Events
Contact Us
Copyright © 2022 Key Media Pty Ltd
News
TV
Updates
Features
Resources
Subscribe
Events
Contact Us
Copyright © 2022 Key Media Pty Ltd
“Our systems were designed for flexibility and ease of use, which is demonstrated in our single application form used for both commercial and residential applications
– one form and one process”
Commercial lending is proving resilient as non-bank ORDE seeks to boost service with an emphasis on flexibility and brokers’ knowledge development
Commercial lending is proving resilient as non-bank ORDE seeks to boost service with an emphasis on flexibility and brokers’ knowledge development
IN Partnership with
Source: RBA Bank Lending Classified by Sector – D5 data, Aug 2022
$1,018
1,200
Jan
Feb
Mar
Apr
May
Jun
Jul
Year-on-year growth
in commercial lending
1,150
1,100
1,050
$1,088
$1,017
$1,098
$1,032
$1,118
$1,028
$1,129
$1,027
$1,142
$1,039
$1,161
$1,048
$1,166
2021
2022
+7.0%
+7.9%
+8.3%
+9.9%
+11.2%
+11.8%
+11.3%
YoY change
Click to see more
“It was critical in our product design and launch strategy phase to have commercial feature as a key pillar within our broad product range”
ORDE commercial loan parameters
Loan-to-value ratio up to 75%
Borrowing up to $2m
Refreshed competitive commercial lending rates
30-year loan terms with no annual reviews
Redraw available
A business drive
ORDE is pushing to attract brokers to its commercial offerings through a spring campaign. The application fee for its residential product range will be waived when a broker submits their client’s residential and commercial finance applications together by 30 November 2022.
Fees can be waived on loan amounts up to $1m when settled, with a minimum $350,000 commercial loan. The standard application fee is payable on any differential above $1m, and both residential and commercial applications must have a common borrower or guarantor.
Other marketing will include social media, broker communications, video, new collateral, presentations for sales BDMs, and the rollout of ORDE’s Talking Commercial webinar event series throughout October and November.
In terms of support and training, ORDE understands that access to the right people is an important factor. This is captured by its ‘Power of One’ ethos that entails ‘One Lending Team’, ‘One Service Level’, and ‘One Application Form’.
The upshot is the broker has direct access to an experienced ORDE BDM and credit assessor, fast turnaround times and approvals, and only has to deal with a single accreditation and application form for all products.
“Our systems were designed for flexibility and ease of use, which is demonstrated in our single application form used for both commercial and residential applications – one form and one process,” says Harkness.
ORDE also provides coaching on a broker’s first residential and commercial deals, plus a simple, seamless refinance experience.
“We will be there at every step of your broker journey to assist in achieving the best outcomes for brokers and borrowers,” says Harkness.
Commercial lending offers brokers the ideal way to diversify and de-risk their income in a time of economic uncertainty.
“Commercial provides further diversity in solutions available, enabling further opportunities for successful, deep and trusted relationships with existing and new customers.”
ORDE is also in it for the long game, which takes the current rate-hiking cycle out of the equation.
“Although resetting of rental rates might lag the increasing-rate environment, owners of commercial will get the opportunity to reset and achieve their long-term outcomes,” says Harkness.
BN
“Our systems were designed for flexibility and ease of use, which is demonstrated in our single application form used for both commercial and residential applications – one form and one process”
Ryan Harkness, ORDE
“Our systems were designed for flexibility and ease of use, which is demonstrated in our single application form used for both commercial and residential applications – one form and one process”
Ryan Harkness, ORDE
1,200
BN
1,150
1,100
1,050
Source: RBA Bank Lending Classified by Sector – D5 data, Aug 2022
$1,018
$1,088
$1,017
$1,098
$1,032
$1,118
$1,028
$1,129
$1,027
$1,142
$1,161
$1,039
$1,048
$1,166
Jan
Feb
Mar
Apr
May
Jun
Jul
2021
2022
YoY change
Click to see more
+7.0%
+7.9%
+8.3%
+9.9%
+11.2%
+11.8%
+11.3%
Year-on-year growth
in commercial lending