Foreign Funds Flock to Australia's Mortgage Market

Australia's mortgage market is attracting increasing interest from foreign private credit funds, with recent deals totaling billions of dollars. The trend has accelerated over the past five years, with large asset purchases such as Blackstone's $36 billion HSBC deal and KKR's RAMS purchase showing global capital's growing appetite for Aussie loans.

According to Nick Procter, managing director for Australia and New Zealand at loan servicer IQ-EQ, foreign investors are drawn to the stability of the Australian economy, low arrears, and strong house price appreciation. 'They've all got this insatiable appetite for Aussie mortgages,' he said.

The deals are made possible by private credit funds sitting outside the banking regulatory perimeter, allowing them to invest in assets that may have thin margins on a bank balance sheet but look attractive inside a private credit fund structure.