Property investors across Australia are waking up to a major shake-up. The Big 5 banks are changing how they assess investment home loans, and the impact could dramatically reduce borrowing power for thousands of Australians looking to buy an investment property.
Following the Federal Government’s proposed changes to negative gearing announced in the 2026 Budget, major lenders including Commonwealth Bank (CBA), ANZ, NAB, Westpac and Macquarie Bank have moved quickly to tighten their lending policies.
For many investors, this means the borrowing power they had a few weeks ago may no longer exist today. If you’re planning to buy an investment property, refinance an existing mortgage, or expand your property portfolio, understanding these new lending rules could save you thousands of dollars and prevent unpleasant surprises when applying for a home loan.
Why Are The Big Banks Changing Investment Home Loan Rules?
The changes stem from the Federal Government’s decision to restrict negative gearing benefits for established residential properties purchased after Budget Night on 13 May 2026.
Traditionally, banks have included projected negative gearing tax benefits when calculating an investor’s borrowing capacity.
These tax savings often helped borrowers qualify for larger mortgages and house loans.
However, with the tax treatment changing, lenders are now adjusting their serviceability calculations to reflect the new reality.
This means many investors will no longer receive the same borrowing power boost they previously enjoyed.
Commonwealth Bank Changes Lending Rules For Investors
Commonwealth Bank of Australia (CBA) became one of the latest major lenders to update its investment lending policy.
From 29 May 2026, CBA will only include negative gearing tax benefits in borrowing power assessments when the investment property meets specific criteria.
When Will Commonwealth Bank Still Allow Negative Gearing Benefits?
CBA will continue recognising negative gearing benefits if:
- -The loan is for constructing a new residential property.
- -The property being purchased is newly built.
- -The borrower is refinancing or increasing a loan secured by a property owned before 13 May 2026.
How Does Commonwealth Bank’s New Policy Affect Borrowing Capacity?
Investors purchasing established residential properties after 13 May 2026 may see their borrowing power reduced because future tax benefits will no longer be included in serviceability calculations.
For some borrowers, this could mean qualifying for tens of thousands of dollars less than they would have under previous lending rules.
ANZ Joins The Big Banks Tightening Investor Lending
ANZ has followed a similar path.
The bank confirmed it would only include negative gearing benefits for established residential properties where the contract was entered into on or before 12 May 2026.
What Does ANZ’s Investment Property Lending Change Mean?
For investors purchasing established homes after the cut-off date, ANZ will assess affordability without relying on future negative gearing tax advantages.
This effectively reduces borrowing power and may require investors to contribute larger deposits or target lower-priced properties.
Which Banks Have Changed Their Investment Property Lending Policies?
ANZ and Commonwealth Bank are not alone.
Several major lenders have already adjusted their investment home loan policies.
Banks Tightening Negative Gearing Lending Assessments
Major lenders that have already introduced changes to their investor lending policies include Commonwealth Bank, ANZ, Westpac, National Australia Bank, Macquarie Bank, Great Southern Bank and Suncorp Bank, reflecting a broader industry shift in response to the government’s negative gearing reforms.
Macquarie Bank was among the first lenders to respond, implementing changes within days of the Federal Budget announcement.
As more lenders review their credit policies, investors should expect borrowing power calculations to continue evolving.
Will Property Investors Lose Borrowing Power?
The short answer, Yes.
When lenders remove negative gearing benefits from serviceability calculations, the borrower’s assessed income effectively decreases.
As a result, maximum borrowing limits can fall.
How Much Could Borrowing Capacity Drop?
The exact reduction in borrowing capacity will vary from investor to investor and depends on factors such as their tax bracket, rental income, existing debts, property-related expenses, loan size and the specific lending policies used by the bank assessing the application.
For some investors, borrowing capacity reductions may be relatively small.
For others with highly leveraged portfolios, the impact could be significant.
This is why comparing home loans and lender policies has never been more important.
House Prices Tipped To Fall As Lending Rules Tighten
The lending changes are already influencing property market forecasts.
Westpac economists predict that changes to negative gearing and capital gains tax arrangements could trigger:
- -A 34% decline in new investor activity.
- -A 20% reduction in dwelling turnover.
- -A national housing price decline of around 2% during the second half of 2026.
Which Australian Cities Could See House Price Falls?
According to Westpac forecasts:
- -Sydney house prices could fall by 3%.
- -Melbourne house prices could fall by 4%.
- -Other capital cities may continue recording modest growth.
Meanwhile, investment bank Morgan Stanley predicts the policy changes could contribute to a 5% to 10% correction in Australian home values.
HSBC Chief Economist Paul Bloxham expects house prices to remain largely flat through 2026 before potentially declining by 3% to 6% nationally in the following year.
Could These Changes Create Opportunities For Property Investors?
Interestingly, not all the news is negative.
Lower competition from investors may create opportunities for buyers with strong borrowing capacity.
Reduced market activity could also lead to:
- -Better property negotiations.
- -Less competition at auctions.
- -Improved affordability in some markets.
- -Potential opportunities for first-home buyers.
Longer term, economists expect the changes to support increased housing construction and potentially improve rental yields.
Should You Buy An Investment Property Before More Banks Change Their Rules?
If you’re considering an investment property purchase, timing could matter.
Different lenders are implementing policy updates at different speeds, and serviceability calculations vary significantly between banks.
This means one lender may approve a loan that another lender declines.
Working with a mortgage broker or comparing lenders carefully can help identify opportunities before further policy tightening occurs.
How To Maximise Borrowing Power After The Negative Gearing Changes
If you’re worried about reduced borrowing capacity, consider:
- -Paying down personal debts.
- -Reducing credit card limits.
- -Improving your credit score.
- -Increasing your deposit.
- -Reviewing lender-specific borrowing policies.
- -Comparing investment home loan rates regularly.
- Even small changes can improve serviceability and increase approval chances.
Frequently Asked Questions- Investor lending changes 2026
Are banks removing negative gearing completely?
No. Banks are adjusting how they assess borrowing power. In some situations, particularly for new builds and certain existing investments, negative gearing benefits may still be considered.
Which banks have changed their lending policies?
Commonwealth Bank, ANZ, Westpac, NAB, Macquarie Bank, Great Southern Bank and Suncorp have all announced policy changes relating to negative gearing and investor lending.
Will these changes affect owner-occupiers?
The changes primarily impact investment property borrowers. Owner-occupier home loans are generally not directly affected. Moneysmart: https://moneysmart.gov.au
Could house prices fall because of the new lending rules?
Several economists believe reduced investor activity could place downward pressure on house prices. Forecasts currently range from modest declines of 2% through to potential corrections of 10%.
Should investors refinance before more policy changes occur?
Every situation is different. Investors should compare home loan options, assess borrowing power, and seek professional advice before making refinancing decisions.
The Biggest Lending Shake-Up For Investors In Years
Australia’s major banks are rapidly adjusting their lending policies as negative gearing reforms reshape the property market.
For investors, the message is clear: borrowing power calculations are changing, lending rules are tightening, and timing matters.
The good news is that opportunities still exist. The key is understanding which lenders are changing their policies, how those changes affect your borrowing capacity, and where to find the most competitive investment home loan options.
Before applying for your next investment mortgage, compare rates, borrowing power and lender policies carefully. Australian Government Treasury
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