The Federal Budget announcement around negative gearing has already started changing the lending landscape in Australia — and most property investors still don’t realise how quickly banks are moving.
Here’s the important part:
Even though the proposed changes are NOT yet legislated, lenders are already adjusting servicing policy and borrowing calculations NOW.
Why?
Because banks must assess loans based on foreseeable future risks and responsible lending obligations.
And that’s exactly what we’re now seeing from lenders like Macquarie Group, Westpac and National Australia Bank.
What Was Announced In The Budget?
The Government announced that from 1 July 2027, negative gearing on established residential investment properties may be restricted.
Under the proposal:
Existing investment properties purchased before 12 May 2026 may be grandfathered
New builds may still qualify for negative gearing
Established properties purchased after the announcement date may lose current tax treatment benefits
The proposed changes are designed to push investor demand toward new housing supply rather than existing dwellings.
So Why Are Banks Changing Lending Policy Already?
Because lenders assess serviceability over the life of a loan — not just today.
If a future tax benefit may disappear, banks may no longer be comfortable including that benefit in borrowing capacity calculations.
That’s the shift happening right now.
Macquarie Group
Macquarie has already confirmed changes to investor servicing assessments following the Budget announcement. Contracts executed after 12 May 2026 for established properties may no longer receive negative gearing add-backs in servicing calculations.
Westpac
Westpac has warned brokers and customers about future servicing shortfalls where negative gearing benefits may no longer apply. Reports suggest some investor borrowing capacity could reduce materially under new assessment models.
National Australia Bank
NAB has now reportedly tightened investor lending assessments in line with the proposed policy direction, citing responsible lending obligations and foreseeable financial changes.
What Could This Mean For Borrowers?
This may impact:
Borrowing capacity
Investment loan approvals
Cash flow assessments
Equity release strategies
Refinancing opportunities
Some mortgage brokers are estimating borrowing capacity reductions of 10–20%, depending on borrower profile and lender assessment methods.
The old strategy of heavily relying on negative gearing benefits to maximise borrowing power may become far less effective moving forward.
What Investors Should Focus On Now
The lending environment is becoming more strategy-driven.
That means investors may need to focus more on:
Stronger cash flow
Yield
Smarter loan structuring
Equity management
Long-term portfolio planning
We may also see stronger demand for:
New builds
Dual occupancy properties
Granny flats
Cash-flow-focused investing
The Bottom Line
Whether these changes ultimately pass legislation exactly as announced or not… the lending market is already reacting.
And that matters.
Because lender policy changes often impact borrowing power BEFORE legislation officially starts.
If you’re considering:
Buying an investment property
Refinancing
Accessing equity
Restructuring debt
Purchasing before policy changes flow through further
…now is the time to understand your position properly.
This is not tax advice. Always speak with your accountant or tax adviser regarding tax implications and investment strategy.
But from a lending perspective, the market is already shifting quickly.
Georgie,
Smartloans
Helping busy Australians use equity, lending & strategy to build real wealth
SEE REFERENCE: https://budget.gov.au/content/factsheets/download/tax-explainers-negative-gearing-capital-gains-tax.pdf