Two more lenders have begun hard‑wiring Labor’s negative gearing changes into their systems, tightening how investor loans are assessed.
National Australia Bank (NAB) and white label lender Connective Horizon have both told brokers they are recalibrating serviceability calculators, so negative gearing is largely confined to new‑build investment properties, while Westpac has signalled further shifts to come.
NAB brings budget changes into credit assessments
In an email sent to bankers and brokers on Monday and seen by The Adviser, National Australia Bank (NAB) announced that it was reshaping how it treated tax losses from geared property in its servicing tests.
The bank said it was effectively limiting negative gearing to qualifying new‑build stock for most fresh investor deals.
NAB said the government had already named 12 May 2026 as the operative date for the new regime, stressing that it now treated that as a real factor in a borrower’s future cash flow.
For purchases where the sale contract was signed on or before 12 May 2026, NAB will continue to build in negative‑gearing benefits.
Where a contract is dated after that point, and the file reaches unconditional approval by close of business on Tuesday, 26 May 2026, NAB said it would let the decision stand without revisiting the numbers.
However, if the contract was signed after 12 May 2026 and the loan has not cleared unconditional approval by 26 May, NAB will reassess the application and will only include negative gearing where the security fits its definition of a new build.
The bank said updated calculators reflecting its new policy would be released on Wednesday (27 May).
Properties NAB considers to be newly added to supply include an off‑the‑plan apartment that has just been constructed, a duplex created by knocking down a single freestanding house, a dwelling built on land that previously had no home, and a new property that is on-sold within a year of first being occupied.
By contrast, extending an existing home, replacing one freestanding house with another of a different size, adding a granny flat to an established dwelling, or selling a new property that has been lived in for more than 12 months will not qualify as a “new build” for serviceability purposes.
Straight refinances that simply replace one loan with another for a property bought before 12 May 2026 will continue to benefit from negative‑gearing add‑backs.
Where borrowers are seeking extra funds, the bank will still recognise negative gearing on top‑up amounts used to buy an eligible new build, to fund an investment purchased before the cut‑off, or to improve a property held prior to that date.
For homes bought as owner‑occupied before 12 May 2026 that are later converted to investment use, NAB said the original purchase debt and any improvement borrowings could still be assessed with negative‑gearing recognition when the property switches to a rental.
In‑flight files that already hold an unconditional approval by 26 May will be honoured, while other applications may be rerun if they rely on post‑budget contracts and do not meet the new‑build test.
‘Foreseeable change’ driving NAB’s stance
NAB executive, home ownership, Lin Lu, framed the change as a responsible response to a major policy shift, adding that the bank’s goal was to help customers navigate the transition.
“We’re continuing to support customers as they navigate the proposed changes to negative gearing announced in the federal budget,” Lu told The Adviser.
“While these changes are not yet legislated, they represent a known and foreseeable factor that may affect a customer’s financial position over the life of a loan. As part of our responsible lending obligations, we take foreseeable changes like this into account when assessing serviceability.”
Lu said NAB’s priority was to prevent situations where investors overextend based on tax advantages that may not be available in future.
“This is about helping ensure customers don’t take on debt they may not be able to service if those changes come into effect,” she explained.
“Our focus is making sure customers can comfortably meet their repayments over the life of the loan, not just at the point of approval.”
Connective Horizon flags reassessments and policy review
Connective Horizon, the aggregator’s white label product funded by Brighten, also issued an update on Monday, announcing that it would be bringing serviceability policy into line with the looming tax changes.
On existing pipelines, the lender sought to reassure brokers that fully approved files would not be disturbed, stating that unconditionally approved applications would not be reassessed.
However, for conditional approvals and approvals in principle, Horizon said those deals would be revisited when they come up for formal approval and would be measured against the latest credit policy.
“It is important to note that where current conditional approvals are held by your customers, if serviceability is reliant on negative gearing benefits, these loans may not be granted formal approval should negative gearing benefits be removed,” it said.
It said that, for new lending on established investment properties, contracts signed before Tuesday, 12 May 2026, would continue to have negative gearing counted in serviceability calculations.
Contracts executed after that remain eligible for negative‑gearing recognition where the investment is in a newly built dwelling, while for established property transactions, negative‑gearing benefits may no longer be included.
Chris Meaker, director and head of distribution, said the lender expected further refinements as the government settled the legislation.
“We will continue to monitor developments and provide updates as legislation is finalised. In the interim, please ensure your investor customers are aware that applications may be reassessed if the proposed changes are implemented,” Meaker said.
“Our credit policy, tools, and calculators are currently under review, and updates will be shared in due course.”
Westpac keeps policy steady – for now
Westpac, meanwhile, wrote to its brokers last week to confirm that, for the moment, its current policy settings remained in place, with more detailed changes to be announced once the law and internal credit work are complete.
For new lending on established investment properties, Westpac has indicated it expects negative gearing will not be applied to any additional lending amount.
It promised to notify brokers formally when the policy was locked in.
On current pipelines, Westpac said that unconditionally approved loans would not be revisited and that those approvals would stand, while conditional approvals and approvals in principle would be assessed at the point of unconditional approval using whatever policy was in force at that time.
The bank told brokers to confirm with their clients whether the security was an established or newly built investment property to explain upfront that the removal of negative‑gearing benefits could create a shortfall in future servicing and to record the customer’s acknowledgment and plan for dealing with any change in position.
Westpac’s credit policy, processes, tools, and calculators are all under review pending the final shape of the law, with Commonwealth Bank of Australia (CBA) and Australia and New Zealand Banking Group adopting similar stances.
On 18 May, Macquarie Bank became the first lender to strip most negative‑gearing add‑backs from its investor serviceability calculators.
[Related: Macquarie scraps negative gearing add-backs for investors]
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