According to reports in the Australian Financial Review, Chinese insurance company Ping An Insurance is offering investors no deposit home loans with interest rates of more than 10%.
According to the AFR, the loans from Ping An are available to Chinese investors looking to buy into two developments in Melbourne and the Gold Coast, but could be rolled out for more developments if they prove popular.
The loans from Ping An would cover 30% of the purchase price of a home in Australia and would carry an interest rate of 14%.
Chinese investors would then turn to Australian lenders to secure finance for the remaining 70% of the purchase price.
The loans are being promoted to Chinese investors by property agency Austpac.
"You can walk into one of our seminars without a dollar in your pocket and still buy an Australian property," Austpac manager Eddie Yuen told the AFR.
While the interest rate may seem high, Yuen told the AFR it is lower than what many people pay for personal loans in mainland China, where rates can be as high as 16%.
Yuen also denied the loans were designed to be attractive to investors looking to flip the properties for a quick profit.
"We would never promote the loan for speculation as this is not smart for Australian property, where costs like stamp duty are high," Yuen told the AFR.
The loans are also required to be secured against a property in China that the investor owns outright.
While loan arrangements such as these may seem extreme compared to Australian lending practices, it may just be a case of firms cashing in on the demand for Australian real estate among Chinese investors, which is growing.
“China is just beginning to deregulate its capital export controls, its economy is still growing at something like twice the rate of developed economies, and its people are big believers in real estate as an asset class,” Andrew Taylor, co-chief executive officer of Juwai.com, which markets Australian real estate to Chinese buyers, said.
