It is Finbase’s first large-scale institutional funding pipeline and will be used for first ranking, low loan-to-value residential mortgages.
The arrangement will lift the non-bank lender’s total funds under management towards $500 million when fully used.
Finbase says securing a high-calibre institutional partner provides the financial backing necessary to scale operations and meet the rising demand from borrowers seeking flexible alternatives to mainstream banking products.
Sydney-headquartered Challenger is a major investment management and financial services company, and the partnership expands its private credit business focused on non-bank lending growth.
Challenger’s head of wholesale loans Andy Armstrong says the venture is a pivotal mechanism to support Finbase’s expansion within the competitive New Zealand landscape.
Finbase, ranked fourth among non-bank lenders in a recent adviser satisfaction survey, will use the capital to increase origination in its core segments and broaden its products into adjacent lending opportunities, Armstrong says.
Challenger’s move is driven by a growing institutional appetite for secure, yield-generating asset exposure outside of traditional banking systems.
“As macroeconomic pressures continue to reshape traditional lending frameworks, this $150 million commitment signals that the non-bank sector is no longer just a niche alternative but a primary destination for institutional asset allocation.”
He says the partnership sets a benchmark for trans-Tasman financial collaboration.
The transaction underscores a broader structural shift in New Zealand, where institutional capital is increasingly targeting the non-bank mortgage sector.
As traditional banks tighten their lending criteria, alternative lenders are rapidly stepping in to capture market share, driven by growing institutional appetite for secure, yield-generating private credit exposure.
Finance company mortgage lending has risen more than 30% since the Depositor Compensation Scheme came into effect in July last year.
The deal strengthens Challenger's thesis as a diversified asset manager capitalising on the structural growth of private credit.
By expanding into New Zealand's non-bank sector, Challenger says it is reducing its reliance on Australian markets and establishes a scalable pipeline for asset allocation.
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