Bluestone Home Loans has said that a mix of rule changes, investor shifts, and rising stress is redrawing the lending map, with the most significant fault lines only just emerging.
Speaking at a media briefing in Sydney on Tuesday (28 July), Bluestone Home Loans’ senior leadership unpacked the most significant market and borrower trends reshaping demand for credit.
Bluestone chief commercial officer Tony MacRae opened by stressing that the lender had consciously moved away from mainstream lending and back into its specialist roots over the past three years.
“We repositioned ourselves three years ago because I think most of the non-bank space lost their identity when money was cheap post-COVID, and so went into mainstream,” he said.
He added that Bluestone “deliberately said no” and chose to rebuild its specialist proposition instead.
“The first stage of it was about re‑establishing that we had the best relationships and the best service in the market,” he said, and added that three years ago, Bluestone closed its proprietary channel down to instead focus on the broker market.
He noted that Bluestone now believed it was “the largest non‑bank, non‑standard lender in the market” with “about 21 per cent of that space,” exiting FY26 on a $9 billion origination run rate compared with $2.4 billion three years ago and $4.5 billion last year.
Digitisation, AI and underwriting capacity
Looking ahead, MacRae said Bluestone was leaning heavily into technology to preserve service levels as volumes grow.
“We’re right at the pointy end of launching a new origination platform that will automate a whole heap of the process that was previously done manually,” he said.
“We'll also add AI into it that will further automate that and give us better checks and balances without purely relying on a human.”
SMSF LRBA ban sparks ‘45‑day dash’
One of the themes discussed was the looming ban on new limited recourse borrowing arrangements (LRBAs) for residential property inside SMSFs from 10 August.
MacRae said Bluestone was “seeing a last-minute 45-day dash to meet the SMSF LRBA ban,” and confirmed the lender would remain in that space for refinancing.
Volumes linked to the deadline, he said, were “still low, double-digit.”
Head of specialised distribution Richard Chesworth clarified how close borrowers could run to the deadline without falling foul of the rules.
“You need a legally binding contract for sale signed up to the 9th of August,” he said, and warned that there had been “miscommunication through some channels in the market that you need your finance approved before the 10th of August,” which he said was not entirely accurate given that some properties will not settle for six to 18 months.
“The challenge is if you have a pre-approval, but if your contract and sale are wrong, or if your trustee is wrong, or your SMSF deed is wrong, you may have issues down the tracks,” he said.
He urged “brokers and planners to work together and solicitors to be really mindful that you've got to get those trusts in order, that they are executed correctly because you can't change any of those purchase contracts post the debt report.”
Refinancing, competition and the risk of ‘square pegs’
Beyond settlement deadlines, Bluestone said it was contemplating what the LRBA landscape would look like once the ban took effect.
“The refinancing market will be interesting whether we see a consolidation of lenders and if some step out,” Chesworth said, and added that refinancing in the LRBA market had “probably been underserved” historically.
“Sometimes people try and fit square pegs in round holes to try and make it work,” he said, especially on long‑dated purchases where they are unsure of the longer-term outlook.
Investors shifting strategies – and colliding with first‑home buyers
Despite his concerns about the pace of change, MacRae said he remained optimistic on investors’ ability to adapt.
“I'm still feeling bullish that investors will find new companies, trust structures, I think they'll find new avenues,” he said.
He said investors “will have a natural tendency to recalibrate, find a new path, and that will be either lower-priced, higher-yielded areas or new builds, which is the natural domain for first home buyers.”
Developers were already adjusting their go‑to‑market strategies due to rising investor interest in new projects, MacRae said.
“Developers are putting their advertising budgets down because investors are lining up to buy their new developments at the moment. We'll start to see a lot more of that.”
ATO debt, non‑deductible interest and mounting stress
Aaron Taylor, Bluestone’s head of non‑standard lending, warned that the focus on SMSF risked distracting from an even larger risk: the growing pile of ATO debt.
“SMSF resi is only a tiny part of the market; there's tens of billions of dollars of ATO debt outstanding, and the ATO is coming really hard with that,” he said.
Recent deductibility changes amplified the burden on businesses carrying significant tax arrears, he said.
“Last year the ATO removed deductibility on tax debt, so for a business that has a million-dollar tax debt, they're paying 11, 12 per cent of interest on that.”
“They have to carry that as an expense to the business that's not deductible, and so for those customers, that expense is really stacking up now.”
He linked this to broader signs of strain in household and SME finances.
“We're starting to see a lot more mortgage stress around the country,” Taylor said. “Today, about 30 per cent of homeowners are facing mortgage stress, and it's higher for business owners as well as the self-employed.”
With the prospect of additional rate rises still on the table, he warned that this “could push us into the same level of mortgage stress that we've not seen in the last 10 years.”
“There are a whole lot more customers that I think still need support from brokers, and there's opportunity there," he added.
Why Bluestone prefers being a non‑bank in this cycle
Asked about the relative outlook for banks and non‑banks as these trends unfold, MacRae said he would rather be on the non‑bank side of the fence.
He said that structural changes in how people earned and structured income favoured lenders with more flexible policies.
“It's a struggle for banks to meet their more rigid requirements, and the banks before the budget was handed down were already under pressure on trust lending, on investor lending,” he said.
“As they're grappling with that, the non-banks, and in particular Bluestone, have been there to fill that gap.”
The banks’ retreat from trust lending and moves to remove negative gearing add-backs from their serviceability calculators were redirecting business toward non‑banks.
“Some lenders have really jumped very early here; the reality is that the tax changes don’t come into effect until 1 July 2027, and actually really won't come into cash flow impact until well after that particular piece,” he said.
“As banks pull out of that space, those customers don't cease to exist, and they're finding a home, and we think that we're able to look at those sorts of customers in a more flexible way.”
[Related: Non-banks plugged into open banking data grid]
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