Challenges of rural lending

All lenders in the property market are now more selective about the deals they will fund. We are seeing that banks are reluctant to do much more property-based lending – they are wanting better credit quality and better returns.

Many funders prefer properties in the main centres and aren’t keen on rural properties or those in smaller towns. However, we have strong relationships with lenders who do have an appetite for the rural and remote. 

We recently completed a deal in north Canterbury where a bank lender was at 60 percent LVR for a farm and was not happy to increase this for our client’s seasonal requirements. We looked into the farmer’s borrowings and saw a lot of the money had been used to purchase machinery for the farm.

We restructured the debt, leveraging against the plant rather than the property to get his exposure down, which made the bank much happier to provide funds for the seasonal needs.

If you think your borrowings could benefit from restructuring, contact your business partner at Finance New Zealand to discuss possible solutions for your debt portfolio.