At Tenfold Property Finance, we closely monitor how Australia’s major banks and lenders adjust their policies in response to economic shifts. Following the recent 2026–27 Federal Budget and the Reserve Bank’s latest cash rate decision, the lending landscape is moving quickly.
To give you a clear picture of how the market is adapting, we have analyzed the immediate policy response of a leading lender. This serves as a critical blueprint for how the industry will assess borrowing capacity, negative gearing, and trust structures moving forward.
Here is what you need to know about the three major shifts occurring right now.
1. The Federal Budget & Negative Gearing: The New Serviceability Framework
The Government’s announced changes to negative gearing are not yet formally legislated, but because they have an effective date of Tuesday, 12 May 2026, lenders are treating this as a “foreseeable change.” Under responsible lending obligations, banks must factor these upcoming changes into loan affordability over the life of the debt.
Here is exactly how a benchmark lender is now assessing negative gearing in serviceability calculations—a framework we expect to see adopted across the wider market:
Purchasing Established vs. New Builds:
Contracts signed on or before 12 May 2026: Applications remain eligible for traditional negative gearing tax benefits in serviceability calculations.
Contracts signed after 12 May 2026: Negative gearing will only be added to serviceability if the property qualifies as a ‘new build’ that genuinely contributes to housing supply. For established properties bought after this date, negative gearing benefits are stripped from the bank’s assessment.
Refinancing Existing Investment Properties:
Dollar-for-Dollar Refinancing: If the investment property was purchased before 12 May 2026, existing negative gearing benefits will still be honored during a straight refinance.
Refinancing with Cash Out: If an investor takes additional equity out, negative gearing on that new debt will only be factored into serviceability if the extra funds are used for:
A property with a contract date on or before 12 May 2026.
An eligible ‘new build’.
Renovations/improvements to an existing investment property acquired before 12 May 2026.
Owner-Occupier to Investment Conversions:
If a client bought a home to live in on or before 12 May 2026 and later decides to convert it into an investment property, lenders will continue to include negative gearing on the original debt used to buy or improve it.
Rental Deductions & Pooling:
Lenders will still allow interest expenses to be deducted from rental income, including the grouping or pooling of expenses across multiple properties, provided they are held under the same individual name.
What this means for active buyers: In-flight applications are already being assessed under these rules. Lenders are actively updating their serviceability calculators. If you are currently in the middle of an application, expect requests for contract dates or confirmation of “new build” status.
2. Tightening Credit Policies Around Companies & Trusts
Effective this week (Thursday, 21 May 2026), we are seeing an immediate tightening of credit policies regarding corporate and trust structures.
Applicants who provide servicing guarantees for properties held within a company or trust will face stricter scrutiny. Moving forward, lenders will require much more granular documentation regarding how those commitments are serviced.
If you are purchasing property through an asset-protection or tax-effective structure like a trust, it is vital to ensure your financial statements, trust deeds, and credit reports are meticulously prepared before submission.
3. Interest Rate Movements: The Passing of the RBA Increase
Following the RBA’s decision to increase the official cash rate on Tuesday, 5 May 2026, the grace period from lenders is coming to an end.
While some lenders successfully delayed passing the rate hike on to give consumers a brief window to adjust, variable home loan reference rates are officially lifting across the board. For example, standard variable rates are increasing by 0.25% p.a., effective this Friday, 22 May 2026.
If you are on a variable rate or have an active pre-approval, your borrowing capacity and monthly repayments will reflect this 25-basis-point increase by the end of the week.
The Tenfold Strategy: Navigating the New Playbook
The combination of a rate hike, a strict line-in-the-sand date for negative gearing, and tighter trust guidelines means that a one-size-fits-all approach to property finance is officially dead. How a bank calculates your borrowing capacity today looks vastly different than it did two weeks ago. At Tenfold Property Finance, we are working closely with our clients to:
Re-run serviceability models using the new post-Budget guidelines.
Audit in-flight applications to ensure compliance with the 12 May contract cutoff.
Structure company and trust loans to meet the incoming credit policy requirements.
Planning your next move? Whether you are looking to buy a new build, refinance an existing portfolio, or review your current variable rate, let’s ensure your finance strategy aligns with these fast-moving lender policies.
Contact the team at Tenfold Property Finance today to review your servicing capacity.
*** Disclaimer: The information provided in this post is for general educational purposes and outlines shifting lender policies. It does not constitute formal tax or financial advice. Customers should always seek guidance from a qualified tax professional regarding negative gearing and trust structures.