HONG KONG: GAO Capital, a Singapore-based multi-family office, is partnering with a Hong Kong mortgage lender to start a direct-lending fund as banks tighten criteria for home loans.
GAO Asian Private Credit Fund would start early next year with about US$80mil and plans to stop taking commitments from new investors at US$250mil, GAO Capital managing director Ted Low said.
It would offer residential mortgages, charging a monthly fee between 1% and 2% and targeting annualised returns of 15%, Low said.
Mortgage approvals are declining in Hong Kong as the regulator introduced a raft of measures, the latest in February, to cool the property market and protect financial stability.
About HK$17bil (US$2.2bil) worth of mortgage loans were approved in October, a decrease of 19% from the previous month and the lowest level since February 2014, according to the Hong Kong Monetary Authority.
“This opportunity only exists because banks aren’t lending as often,” Low said in an interview in Hong Kong.
An inability to refinance an existing home loan is one hurdle borrowers face when trying to get a mortgage from the bank, Low said. It is also difficult to get a second mortgage and the approval process is long, he said.
The fund will be managed by Fletcher Leung and Nigel Lo, managing directors at Prosperous Mortgage Company, the venture partner. – Bloomberg
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