Weekly Credit Crunch 25th May 2026 🌟

Budget Changes Are Already Flowing Through Lending Policy

This week’s lender updates are a big reminder that policy does not sit still for long, especially after a Federal Budget announcement.

We are already seeing lenders respond to proposed changes around negative gearing, investment lending, servicing and new-build housing supply.

The key message for brokers?  Watch this space—because there are a lot more lenders with big changes coming!

🏦 Macquarie Bank

Negative Gearing Policy Update

Following the Federal Budget announcement, Macquarie has updated its approach to negative gearing in serviceability calculations.

Macquarie has confirmed it is factoring the proposed legislative changes into its responsible lending assessment, as the changes may have a foreseeable impact on a customer’s long-term servicing position.

🔑 Key Points for Brokers

Buying a new investment property

• ✅ Contracts dated on or before 12 May 2026 remain eligible for negative gearing in servicing.
• ⚠️ Contracts dated after 12 May 2026 will only have negative gearing included if the property is an eligible new build.
• 🏗️ The new build must genuinely increase housing supply.

Refinancing an existing investment property

• ✅ Dollar-for-dollar refinance of a property purchased before 12 May 2026 remains eligible.
• ⚠️ Cash-out refinances will only include negative gearing on the additional borrowing where the funds are used for:
  • Purchasing a pre-12 May 2026 investment property
  • Purchasing an eligible new build
  • Improving a pre-12 May 2026 investment property

Owner-occupied converting to investment

• ✅ Negative gearing may still be included where the debt was used to acquire or improve a property purchased on or before 12 May 2026, even if that property later becomes an investment.

💡 Broker Note

Macquarie has confirmed these changes are already effective for all applications and they are working to update their servicing calculator.

🏦 Great Southern Bank

Investor Applications for Established Dwellings

Great Southern Bank has also updated its policy for investor applications involving established residential dwellings.

🔑 What’s Changed?

For applications where the contract date is after 12 May 2026, negative gearing will no longer be included in the servicing assessment.

✅ This does not apply to:

• Established dwellings with a contract dated on or before 12 May 2026
• New-build investment properties

🏗️ Eligible New Builds May Include:

• Newly constructed apartments purchased off-the-plan
• Duplexes built through a knock-down rebuild replacing a single freestanding home
• Residential construction on previously vacant land
• Newly built properties occupied for less than 12 months before first sale

🏦 Westpac Group

Negative Gearing Guidance + May Credit Policy Updates

Westpac Group has issued guidance following the Federal Government’s 2026–27 Budget announcement, which proposes changes to negative gearing that may impact how some investor home loan applications are assessed for serviceability in the future.

Importantly, these changes are not yet law and still need to be passed by Parliament.

For now, Westpac has confirmed that current policy applies until further notice, however brokers should take a balanced and considered approach in line with Responsible Lending Obligations.

🔑 Key Guidance for Brokers

Westpac has advised that the guidance applies to both new and in-flight applications, and is designed to help brokers ensure customers understand the potential future impact of the proposed changes.

🏠 New Lending on Established Investment Properties

Subject to final legislation and future credit policy settings:

• ⚠️ Negative gearing may no longer apply to the additional lending amount.
• 🔍 Serviceability may need to be reassessed under the applicable policy at that time.
• 📢 Westpac will provide formal updates if and when its existing policy changes.

📌 In-Flight Applications

Unconditionally approved applications

• ✅ These will not be reassessed retrospectively.
• ✅ The approval stands as assessed.

Conditional approvals and AIPs

• ⚠️ These will be assessed at unconditional approval using the latest applicable credit policy.
• 🧾 Brokers should make sure customers understand that future reassessment may apply.

✅ How to Support Customers

Westpac has encouraged brokers to:

• Confirm whether the application involves an established or newly built investment property.
• Set expectations early if removing the negative gearing benefit may create a future serviceability shortfall.
• Document the customer’s acknowledgement of potential impacts to future servicing capacity.
• Document how the customer intends to respond if their position changes.
• Avoid providing assurances about future tax benefits.

🔄 What Happens Next?

Westpac has confirmed that further updates will be shared as Federal Government legislation is finalised.

Until then:

• Brokers should make investor customers aware that applications may need to be reassessed if the proposed changes are legislated.
• Credit policy, processes, tools and calculators are currently under review.

🎓 Webinar: Navigate to Validate

Westpac is running a dedicated broker webinar to step through the changes.

Date: Thursday 28 May
Time: 11:00am–12:00pm AEST

What Will Be Covered?

• Negative gearing update
  Context around Westpac’s current position and how brokers will be supported as further clarity emerges.
• Valuation changes for purchase applications
  Updates designed to improve efficiency and support faster progression of purchase applications.
• Customer ID verification changes
  Updated submission expectations and what brokers need to be aware of.
• Credit policy and documentation updates
  Policy and documentation enhancements to support cleaner submissions and reduce rework.

💡 Broker Note

Check your inbox for your personalised Westpac View registration link and password.

🏦 Bank First

Servicing Calculator Updates

Bank First has updated its servicing calculator based on broker feedback.

What’s New?

• ✅ Reset button fixed
  The reset button now fully clears all fields.
• 🏡 5% Government Deposit Scheme option added
  Brokers can now select “Yes” to confirm no LMI applies.
• 🛠️ Bug fix completed
  Fixed an issue causing some users to see a #NAME error.

💡 Broker Note

Make sure you are using the latest version of the calculator available via the Bank First Broker Resource Centre.

🏦 Newcastle Permanent

Valuation Rule Updates

Newcastle Permanent has updated valuation rules to streamline the application process and increase AVM acceptance.

Key Changes Include:

• ✅ Increased maximum loan amount
• ✅ Standardised acceptable LVR to 80%
• ✅ Removed property size limitations
• ✅ Simplified Forecast Standard Deviation requirements

💡 Broker Note

These changes are effective immediately in Property Hub and should help reduce the need for full valuations across more applications.

🏦 NAB

5% Deposit Scheme Added to Instant Pricing Tool

From Thursday 21 May 2026, NAB is adding a new Deposit Scheme Guarantee option to the Customer Segment dropdown in the Instant Pricing Tool.

Selecting this option will:

• ✅ Automatically apply the correct pricing as if the loan were at 80% LVR
• ✅ Remove the need to manually adjust the security value
• ✅ Ensure the customer segment appears correctly in the pricing approval

Pipeline Treatment

• Existing pricing approvals prior to 21 May 2026 can proceed without being resubmitted.
• New pricing requests from 21 May 2026 must use the new Deposit Scheme Guarantee option.

💡 Broker Note

This is a great process improvement and should reduce manual workarounds for brokers lodging Deposit Scheme applications.

🏦 Ubank

Home Lending Policy & Process Updates

Ubank has announced updates to its home lending policy and process, effective 29 May 2026.

>80% LVR Loan Term Solutions

From 29 May 2026, home loans with an LVR over 80% will only be available for:

• Owner-occupied purchase applications
• Investor principal and interest purchase applications
• Loan terms up to 30 years

These will no longer be available for:

• Refinances
• Other loan purposes

Additional Update

• The maximum loan limit for applications with an LVR above 85% is $2,000,000.

💡 Broker Note

This is an important change for high-LVR scenarios, particularly where clients are refinancing or seeking longer loan terms.

🏦 Brighten

Negative Gearing Interim Guidance

Brighten has also released interim guidance following the Federal Budget, outlining how the proposed negative gearing changes may impact investor loan serviceability under its Responsible Lending Obligations. The key focus is the potential removal of negative gearing benefits for established investment properties where contracts were entered into after the Budget announcement cut-off.

🔑 Key Points for New Lending

Established investment properties

• ✅ Contracts executed before 7:30pm AEST on Tuesday 12 May 2026 remain eligible for negative gearing benefits in servicing.
• ⚠️ Contracts executed after 7:30pm AEST on Tuesday 12 May 2026 may no longer have negative gearing benefits included in serviceability assessments.
• 🏗️ There is no change for new dwelling investment property transactions.

📌 Applications Already in Progress

Brighten has confirmed that:

• Conditionally approved applications and AIPs will be reassessed at unconditional approval under the latest credit policy.
• If serviceability relies on negative gearing benefits, the application may not receive formal approval if those benefits are removed.
• Brokers should carefully review any in-progress investment applications where servicing is tight.

🛠️ Servicing Calculator Workaround

Brighten has also provided an interim workaround in its current servicing tool.

For affected established investment property scenarios, brokers should ensure the relevant Investment Use flag is adjusted in line with Brighten’s guidance until the calculator is updated.

🎓 This Week’s Feature: Commercial Education Flagship Week with Brokerversity