Late last month I caught up with the team from McGees Agency Capital Transactions – Hugh Menck and Archie Halliday – to provide my insights on current commercial lending conditions and market movements.
With the Reserve Bank holding the cash rate steady at 3.60% since August 2025, both banks and private lenders are recalibrating their risk appetite. From my perspective, this shift is creating a more competitive, opportunity-rich environment for borrowers heading into 2026. Below is a summary of my shared insights on how lender behaviour is evolving, and what that could mean for your next commercial funding decision.
Q: How has the appetite of the top-tier lenders changed over the past 6-months? And how is that reflected in their lending policy?
A: Increased competition from private lenders has influenced the major banks’ risk appetite and lending approach. Lenders are showing greater flexibility toward development funding, with reduced pre-sale and pre-leasing requirements and a willingness to support higher LVRs where project fundamentals are strong. Major banks are also sharpening pricing to remain competitive with private capital. In short, borrowers are benefiting from increased availability of funds, lower costs of capital, and more flexible terms.
Q: Are any areas of the market or asset classes proving particularly difficult to obtain funding for?
A: Certain specialised asset classes are proving more challenging to finance. Assets such as NDIS accommodation, multi-room residential properties, and regional service stations are subject to increased scrutiny from lenders, with a stronger focus on assessing their alternative use value and long-term viability.
Q: Private Credit lenders, where are you seeing rates and risk appetite?
A: The private credit sector remains a major force in the commercial lending landscape, accounting for a growing share of commercial property, site acquisition & development finance.
Q: Private Credit regulation, what changes do you foresee?
A: A tightening of regulation and moves to make private credit markets more transparent are expected over time. This will likely encourage greater borrower adoption of private credit as a mainstream funding source, while driving a flight to quality toward established operators with a proven track record, disciplined risk analysis, and strong governance frameworks.
Q: What are lenders saying about construction costs?
A: Heightened scrutiny of builders, driven by broader industry concerns, remains prevalent. However, there is a growing appetite among lenders to reduce contingency allowances for variations.
Q: Are you recommending your clients fix their rates?
A: With limited further rate reductions forecast, most borrowers are maintaining floating-rate facilities for flexibility. However, throughout the past 12 months, periods of heightened global uncertainty have created opportunities for investors to lock in substantial discounts, often 50 bps or more, relative to floating rates. Timing and market conditions remain key drivers in determining whether a fixed-rate strategy is advantageous.
As always, the key is timing and strategy. With credit conditions loosening and lenders sharpening their pencils, there’s real opportunity for well-prepared borrowers — particularly those with strong fundamentals and clear project outcomes. Whether you’re looking to refinance, fund a new acquisition, or explore private credit options, now is the time to reassess your lending position and plan ahead for 2026. If you’d like to discuss how these trends may impact your next move, feel free to reach out, I’m always happy to share insights and explore the best-fit finance strategy for your goals.
Note: Shared with permission from original Linked-In post by Hugh Menck McGees Head of Capital Transactions – ‘Finance: Credit Conditions ease as Risk Appetite Recalibrates Across Lending’ published 16.10.25.
Published: 4.11.25
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Green Finance Group Pty Ltd ACN 145 035 221 is authorised under LMG Broker Services Pty Ltd ACN 632 405 504 Australian Credit Licence 517192.
“Over my decade long career in finance I have developed an in depth understanding of the debt landscape from banks to private credit funds.”
BCom – Finance (UQ)
Commercial Finance, Equipment Finance, Home FinanceFortitude Valley, Brisbane
One of Australia's most in-demand commercial finance brokers and awardee of Best Finance Broker 2024 (Better Business Awards), James specialises in commercial property investment and development finance.
Prior to joining the Green Team, I occupied management roles at Australia's largest commercial bank – National Australia Bank (NAB). I have broad experience in business, corporate, equipment and property debt and thrive on complex transactions.
