Foreign buyers are using private lenders to get around tighter banking rules, news.com.au reports.
Financial regulators have ordered the banks to toughen up their lending standards for foreigners.
Some of this money was suspicious. Last year ANZ found evidence of “sloppy applications with missing passport pages, salaries being paid by obscure offshore companies, and crudely translated supporting loan documents”, according to the Financial Review.
The Big Four banks have since tightened up their rules, and are refusing mortgages to anyone who can’t prove an Australian source of income.
But there’s strong evidence that foreign buyers have since turned to private lending funds, which aren’t bound by the same standards.
One of these funds, $1.5 billion Investorist boasted: “it gives foreign buyers a chance to ‘bypass the banks’.”
A recent survey found that Melbourne was the second most preferred destination for Chinese investors worldwide.
Concerns have been raised about the lack of transparency surrounding Chinese money flowing into the country.