ING has moved quickly to align its lending policy with the federal government's 2026-27 budget, updating its serviceability treatment of negative gearing effective Friday, 12 June. The changes affect how the bank assesses investor applications and will have direct implications for borrowing capacity on established residential property purchases made after 12 May.
The practical impact on investor borrowing capacity is already becoming clear. Broker modelling suggests the removal of negative gearing from serviceability calculations could reduce borrowing power by as much as 20% in some cases — with banks factoring projected negative gearing tax benefits into serviceability upfront, effectively boosting borrowing capacity before a single tax return is lodged. A RedZed survey of almost 200 brokers found 85% expect the budget changes to impact property prices.
ING's policy draws a clear line at 12 May. Properties purchased on or before that date retain their existing treatment — negative gearing can still be factored into serviceability assessments as before. The same favourable treatment applies to new builds that meet the federal budget's definition of "new build" as outlined in the Federal Budget Tax Explainer. For established residential properties purchased after the cut-off, interest expense deductions will be capped at rental income for serviceability purposes.
The policy sets out clear transitional rules for applications currently in the pipeline. Loans converting from a pre-approval will be assessed under the new rules where the property is eligible under the proposed government legislation.
Conditional or unconditional approvals resubmitted for minor administrative changes — such as a spelling correction — on or before 12 July will not be reassessed and the original approval stands. The same applications resubmitted after 12 July will be subject to the new serviceability treatment. Any application resubmitted with material changes — including loan amount, repayment type, or security — will be assessed under the updated policy regardless of timing.
Brokers should audit any in-flight investor applications now — confirm the property type, check the contract date against the 12 May cut-off, and identify any files approaching the 12 July deadline for minor administrative changes before they are caught by the updated rules.
Brokers managing clients with portfolios spanning both eligible and ineligible properties should note ING's treatment of mixed scenarios. Where total interest expense across the portfolio exceeds total rental income after shading, the negative gearing benefit will be capped at rental income for serviceability. In practice, this means the advantage is neutralised where interest expenses exceed rental income under the new rules — brokers should model the total portfolio position, not just individual properties, before resubmitting any file.
Brokers should note that ING's online serviceability calculator is still being updated — the bank has confirmed it will advise once the new calculator is live.
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