ASIC Freezes $573.2 Million Mortgage Fund — What Borrowers Using Private Credit and Bridging Finance Must Know

Key takeaway: ASIC froze a $573.2 million mortgage fund on 27 October 2026 over disclosure failures — marking a major escalation in its private credit crackdown. Borrowers seeking bridging or private finance should verify their lender holds a current Australian Credit Licence before proceeding.

What Happened: ASIC Acts Against a Major Mortgage Fund

Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), moved on 27 October 2026 to freeze a $573.2 million mortgage fund after raising significant concerns about disclosure failures. The action is one of ASIC's largest interventions in the private mortgage sector to date.

The fund faces "major disclosure questions," according to The Adviser, suggesting investors may not have had full visibility over the underlying loan portfolio's risk profile. The move is part of a broader regulatory pattern the regulator has signalled over the past 12 months — and it is the most significant single action yet.

Why the Private Credit Sector Is Under Regulatory Pressure

Australia's private credit market has expanded rapidly, driven by rising demand from borrowers who cannot access traditional bank finance and by institutional appetite for yield in a higher-rate environment. The RBA cash rate has been held at 4.60% since 30 September 2026 — sustaining pressure on borrowers and keeping demand for alternative finance elevated.

However, not all participants in this market operate under the same regulatory framework. Some funds operate as managed investment schemes (MIS) under the Corporations Act rather than as Australian Credit Licence (ACL) holders under the National Consumer Credit Protection Act. This creates a regulatory gap: fund managers are not required to meet the same responsible lending, hardship assistance, or dispute resolution standards that ACL holders must comply with.

ASIC has publicly signalled it expects improved disclosure, governance, and liquidity management from private credit managers — especially those whose portfolios include illiquid mortgage assets.

"Private credit scrutiny is mounting — borrowers need to know whether their lender is operating under a credit licence or a fund structure, as the consumer protections are fundamentally different."

What Regulated Non-Bank Lenders Offer That Unregulated Funds Cannot

Borrowers seeking bridging finance or private funding in Australia should understand the critical distinction between:

• Regulated ACL holders — must comply with the National Credit Code, maintain hardship provisions, participate in AFCA (Australian Financial Complaints Authority), and assess loan suitability
• Unregistered private funds — may offer higher LVRs or looser criteria, but lack formal consumer protections and are now subject to heightened ASIC scrutiny

Choosing a regulated lender means your loan application is assessed responsibly, your rights in hardship are protected, and you have formal recourse if something goes wrong.

Due Diligence Checklist for Private Credit Borrowers

Before signing any bridging loan or private funding agreement, verify:

1. Does the lender hold a current ACL (searchable on ASIC Connect)?
2. Is the lender a member of AFCA?
3. Are the loan terms, fees, and exit conditions clearly disclosed upfront?
4. Is there a clear exit strategy documented — refinance, sale proceeds, or other?

What This Means for Borrowers Seeking Bridging and Private Finance

ASIC's action should not cause panic among borrowers with genuine short-term finance needs — bridging loans and private funding remain legal, legitimate, and widely used in Australian property markets. But it does reinforce the importance of working with lenders who operate under proper regulatory oversight.

At MPFG Capital (ACL 553698), all bridging and private funding products are structured under our Australian Credit Licence. Every application is individually assessed, every loan term is clearly disclosed, and every borrower has recourse through AFCA if needed. Whether you need short-term finance to bridge a property sale, fund a development, or access equity while waiting for refinance, our Private Funding and Bridging Finance team can structure a compliant, transparent solution.

FAQ

What is a bridging loan and how does it work in Australia?

A bridging loan is a short-term finance facility, typically 3–24 months, secured against property. It "bridges" a gap in funding — for example, when you have purchased a new property before your existing one has sold, or when you need funds during a development project before longer-term finance is arranged. Licensed lenders like MPFG Capital assess each application against your exit strategy and overall financial position.

Is my bridging loan safe if the lender is a private fund rather than a licensed credit provider?

Not necessarily. Private credit funds operating as managed investment schemes under the Corporations Act do not carry the same consumer protections as ACL-licensed lenders. They are not required to provide hardship assistance, and complaints cannot be lodged with AFCA. Always confirm your lender's ACL number before proceeding.

How much can I borrow with a bridging loan in Australia?

Bridging loan limits vary by lender and are assessed against the security property's value, your income, and the strength of your exit strategy. Non-bank lenders like MPFG Capital can often move faster than banks and provide more flexible terms, particularly for self-employed borrowers or those with complex financial structures.

This article is general information only and does not constitute financial or credit advice. All applications are subject to credit assessment by MPFG Capital (ACL 553698).