Challenger Investment Management (CIM), a Sydney-based alternative credit provider, has strengthened its foothold in New Zealand’s residential mortgage market through the acquisition of Bluestone Home Loans’ New Zealand loan book in a deal valued at $597 million.
This move highlights the company’s ongoing strategy to expand its portfolio of residential mortgages, with a particular focus on whole loans across both Australia and New Zealand.
Expanding with Precision
CIM, the fixed-income funds management division of Challenger Group, continues to target high-potential niches in the investment space, including a new acquisition in residential mortgages. The acquisition forms part of CIM’s ongoing strategy to purchase loans from non-bank lenders in Australia and New Zealand, a move that Andy Armstrong, CIM’s head of whole loans, said would bolster the firm’s pursuit of risk-adjusted returns. Armstrong also pointed out the favourable conditions within New Zealand’s mortgage market.
CIM has launched Challenger NZ HoldCo1, a subsidiary based in New Zealand, ensuring strong loan servicing capabilities to manage the acquisition,. The company is also eyeing further expansion through forward flow and block portfolio transactions.
New Zealand’s Mortgage Market
CIM’s strategic move into New Zealand’s residential mortgage market reflects the sector’s long-standing stability, which has been a key factor in the company’s decision. According to Andy Armstrong, head of whole loans at CIM, the market’s resilience amid macroeconomic shifts was a significant draw. “The New Zealand residential mortgage market is an attractive market to Challenger, as it has historically exhibited very strong and stable performance regardless of the underlying macroeconomic conditions,” he said.
While the acquisition signals a growing interest in New Zealand, Armstrong emphasised that CIM does not plan to directly originate home loans.
“Challenger does not have plans to act as a primary originator of home loans in New Zealand but instead plans to expand its network of existing lenders who want to explore different financing options for their portfolios,” he explained.
A Decade of Investment Growth
Since its founding in 2005, Challenger has established itself as a key player in providing senior and mezzanine financing across public and private markets. The firm has since broadened its scope, incorporating whole loan portfolios into its offerings, with a focus on residential mortgages.
Challenger’s entry into New Zealand’s residential mortgage market in 2017 added to its growing presence in the region, alongside its commercial real estate and acquisition finance activities. The acquisition of Bluestone signifies another step in CIM’s long-term strategy to solidify whole loans as a fundamental aspect of its investment approach.
Opportunities for Advisers and Non-Bank Lenders
CIM’s expansion is also poised to benefit mortgage advisers and non-bank lenders. Armstrong noted a shift in borrower behaviour, with more individuals exploring alternative lending options.
“However, we think there is a valid role for non-bank lenders who can provide more timely access to funds, more tailored solutions for borrowers, and have more flexible terms for lending,” he said.
The trend toward mortgage advisers has been particularly pronounced among first-time homebuyers. In 2024, about half of borrowers in New Zealand used advisers to secure home loans—a figure that rose among new entrants to the housing market.