Macquarie Bank has become the first of Australia’s top five lenders to overhaul its mortgage policies in response to the federal government’s abolition of negative gearing on existing investment properties, moving ahead of legislation and prompting warnings from brokers that borrowing capacity for investors could fall by up to 40%.
Macquarie formally briefed its broker network on Monday, outlining a new investor serviceability policy that rewrites how negative gearing is treated for both new purchases and refinances.
In a letter to brokers, the bank said it was taking “a considered approach aligned with existing regulatory guidance and responsible lending requirements”. Despite the changes not yet being legislated, they became effective on Tuesday, 12 May – the night of the federal budget. “As such, it is a foreseeable change for customers that will impact their servicing capacity over the life of their loan,” the letter said.
A Macquarie spokesman confirmed the shift, as reported by Financial Review. “In light of the federal budget, we have made changes to our investor lending policy to ensure we continue to comply with our responsible lending obligations,” the spokesman said. “These changes help us ensure property investors are able to afford their loan when the changes to negative gearing come into effect.”
Under the new rules, contracts executed on or before 12 May 2026 will remain eligible for negative gearing add-backs in Macquarie’s serviceability calculations. For dollar-for-dollar refinances of existing investment properties purchased before 12 May 2026, negative gearing tax benefits will still be recognised in serviceability checks.
Westpac has also tightened lending to negatively geared investors, becoming one of the first among the big four banks to adjust policies. A Westpac spokeswoman said the bank had advised its home lenders there could be changes in the future, but broker policies had not formally changed. Commonwealth Bank, National Australia Bank, and ANZ said they were still working through the implications of the federal tax policy, News.com.au reported.
The impact on borrowing capacity is expected to be significant. In an interview with Financial Review, mortgage broker Alex Veljancevski estimated a borrower with an annual income of $100,000 and no existing debt could see their borrowing capacity for an investor loan fall from $750,000 to $600,000 – a 20% reduction – with no change to income or expenses.
Refinancer.com.au broker Aidan Hartley predicted a steeper decline. “Banks are like dominoes. If one moves, they will all likely follow, which could have a huge effect on investor applications,” Hartley told News.com.au.
Matthew Mohl, head of private clients at mortgage advisory business Alcove Private, urged borrowers with pre-approvals to reassess their position.
“What made sense two weeks ago needs revisiting,” he said. “This isn’t pending legislation, lenders are applying it now.”
The effects are already visible in auction markets. Preliminary data from Cotality shows Sydney’s auction clearance rate fell from 55% to 49% last week – the lowest level since the start of the pandemic.
Figures from Ray White show average attendance at its open homes dropped from 2.5 people per property to 2.1 last week, compared with 3.4 at the same time last year.
Under the new rules announced in the 2026–27 federal budget, negative gearing will be limited to new-build properties from 1 July 2027. Established housing bought after budget night will lose the concession, while investors in new builds will retain the ability to deduct losses from other income.
Loan Market broker Nitish Kumar told Financial Review that he expected the remaining major banks to follow Macquarie’s lead, although some might wait until the changes pass into law.
“Investors will get a lot more conscious of what they buy,” he said.
