H2 2024 Australia Lender Sentiment Survey

Key points:

• Appetite for new loans over the next three months has increased for majority of lenders, 60% want to grow  commercial real estate exposures with and no surveyed lenders intending to decrease their book.
• Lender investment preference continues to be dominated by the Industrial & Logistics sector, followed by Residential Build to Sell. Of surveyed lenders, 20% noted data-centres as a top two investment preference. Lenders continue to display caution towards the Office sector.
• For new residential-to-sell construction lending, the largest cohort of lenders require 80%-100% of debt funding covered by pre-sales.
• The total cost of debt remains at elevated levels with a moderate consensus view amongst institutions and surveyed lenders that rates have peaked. The trajectory and timing of interest rates over the next 12-months remains uncertain.
• Credit margin expectations broadly increased for domestic banks, with other lenders reporting expectations of decreases over the next 3-months.
• Preferred LVR requirements and ICR requirements remained broadly consistent with prior survey results.
• Refinancing decisions are most impacted by leverage and asset type, with environmental credential impact declining in impact over the last 6-months.
• Sustainable financing was found to have minimal impact on credit availability and pricing.
• More than 40% of lenders expect debt capital market conditions to experience at least moderate change for secondary assets over the comin