Australia’s non-bank lending sector is experiencing a renaissance—and warehouse lending is at the heart of this transformation. As traditional banks tighten their lending criteria and fintechs move quickly to fill the gap, warehouse facilities are becoming the go-to funding solution for mortgage originators, asset financiers, and consumer credit providers. But what exactly is warehouse lending, how does it operate in the Australian context, and why is it such a hot topic in 2025?
What Is Warehouse Lending and Why Is It Booming?
Warehouse lending is a specialised form of short-term funding where an institutional lender—typically a bank or a large investment fund—provides a line of credit to a non-bank lender. The non-bank uses this facility to fund new loans (such as mortgages, car finance, or business loans) before packaging and selling them to investors or into securitisation markets.
- How it works: The non-bank lender draws down on the warehouse facility each time it issues a new loan, then repays the facility when those loans are sold or refinanced.
- Security: The underlying loans act as collateral for the warehouse provider, reducing risk.
- Scale: Facilities can range from $20 million for fintech startups to over $1 billion for established mortgage aggregators.
The surge in warehouse lending is driven by a few key trends in 2025:
- Ongoing regulatory pressure on major banks, leading to tighter lending standards.
- Strong investor appetite for asset-backed securities amid low interest rates and volatile equity markets.
- Fintech innovation, enabling faster loan origination and digital credit assessment.
2025 Policy Shifts and Regulatory Updates
This year, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA) have introduced several policy refinements impacting warehouse lending:
- APRA’s capital framework update: Non-bank lenders are now required to meet enhanced reporting standards when utilising warehouse funding, with a focus on loan quality and borrower creditworthiness.
- Consumer protection measures: The Australian Securities & Investments Commission (ASIC) has tightened oversight of warehouse-backed lending, particularly for buy-now-pay-later and consumer credit products, to ensure responsible lending practices.
- Open banking integration: Many warehouse facilities now require real-time access to borrower data via open banking APIs, streamlining verification and risk assessment.
These measures aim to promote transparency and stability in a sector that’s rapidly growing in scale and complexity.
Real-World Examples: Who’s Using Warehouse Lending?
Warehouse lending is no longer the exclusive domain of large mortgage lenders. In 2025, a diverse range of Australian businesses are leveraging these facilities:
- Fintech mortgage originators like Athena and Nano use warehouse lines from global banks to fund home loans before securitising them for institutional investors.
- Asset finance startups such as Plenti and Wisr utilise warehouse facilities to quickly scale their car and personal loan portfolios.
- Buy-now-pay-later providers including Afterpay and Zip have secured warehouse funding to support their rapid transaction growth, often backed by major local and international funds.
In a high-profile example from March 2025, a leading digital mortgage lender secured a $500 million warehouse facility from a consortium of local superannuation funds, citing the need to meet surging demand from first-home buyers as interest rates steadied and property markets rebounded.
Benefits and Risks: What Borrowers and Lenders Should Know
Warehouse lending provides essential liquidity for non-banks, enabling them to:
- Expand lending without tying up their own capital.
- Respond quickly to market opportunities (such as surges in refinancing or demand for green loans).
- Offer more competitive rates to borrowers, thanks to lower funding costs.
However, there are risks to consider:
- Market volatility: If demand for securitised loans falls, non-banks may struggle to offload loans from their warehouse, potentially impacting liquidity.
- Regulatory changes: New capital or disclosure requirements can affect the cost and availability of warehouse facilities.
- Concentration risk: Heavy reliance on a single warehouse provider can expose lenders to abrupt changes in terms or access.
The Future of Warehouse Lending in Australia
With the non-bank sector forecast to claim over 10% of Australia’s new mortgage flows in 2025, warehouse lending is set to become even more pivotal. As regulatory scrutiny intensifies and investors demand greater transparency, expect to see:
- More diversified funding sources, including super funds and offshore investors.
- Integration of real-time risk analytics to satisfy both warehouse providers and regulators.
- Further innovation in digital loan origination, supported by flexible warehouse lines.
For borrowers, this means greater choice and potentially sharper rates. For lenders, the challenge will be balancing growth with prudent risk management in a fast-evolving landscape.
