The Federal Government’s 2026-27 Budget proposed changes to negative gearing. While these proposed changes are yet to be passed into law by Parliament, financial institutions have taken a “balanced and considered” approach that supports their responsible lending obligations.

This has reduced the potential borrowing capacity of applicants. The use of negative gearing benefits in serviceability criteria is set to be reassessed, and it may create a “shortfall” in serviceability in the future.

Thus, financial institutions have now revised their serviceability models to accommodate this “proposed change”. It’s a wait-and-see game.

 

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