Investor loan applications are down 28% since the Budget. What it means for investors and brokers

As Commonwealth Bank shareholders put questions to the board at today's annual general meeting, mortgage strategy is high on the agenda. This article explains what the lending data shows, why investors have pulled back and what it means for investors and the brokers who arrange their finance.

What the banks have reported

At its full-year results in August, CBA reported a 15% fall in home loan applications since the 12 May Budget, which changed tax rules for property investors, and after three interest rate rises.

The fall was concentrated among investors. Investor applications dropped 28% after the Budget, while owner-occupier applications, which weren't affected by the tax changes, fell 9%.

CBA isn't alone. Westpac reported a 20% fall in applications compared with its second quarter, and NAB flagged a 15% slide in late July.

The mix of new lending has changed as a result. At CBA, owner-occupiers made up 61% of new lending flows, up from 59% a year earlier, while investors fell from 41% to 39%.

Source: CBA full-year results, August 2026.

Why investors have pulled back

• Tax changes. From 1 July 2027, established residential properties bought after Budget night can no longer be negatively geared against other income. New builds and properties already owned are exempt. The CGT discount has also been replaced with indexation and a 30% minimum tax on gains from 1 July 2027. See Negative gearing has changed for residential property. Where does that leave commercial?
• Higher interest rates. The cash rate has risen to 4.60%, the highest since 2011, and more than 80% of consumers expect mortgage rates to rise further.
• Slower rent growth. National rents rose only 0.5% in the September quarter, as tenants reached an affordability ceiling. See Rents have hit a ceiling.
• Falling values. National home values are 5.2% below their March peak, and REA and CommBank both expect further falls.

Together, these factors have made established residential investment much less attractive than it was a year ago.

Changes to bank lending policy

The pullback isn't only about investor demand. Lenders have also changed how they assess investors. Major lenders including ANZ, NAB and Macquarie have updated their serviceability policies so that negative gearing benefits are generally only recognised for new builds or established properties bought before the Budget.

In practice, an investor buying an established property today may be able to borrow less from a bank than the same investor could have borrowed a few months ago, even with the same income and assets.

What this means for investors

• Borrowing capacity may be lower. Investors planning to expand their portfolio should get updated pre-approvals rather than relying on older assessments.
• Existing portfolios are mostly grandfathered. Properties bought before Budget night keep their current negative gearing treatment. That makes holding existing properties relatively more attractive than buying new established ones.
• Strategies are shifting. With established residential property less attractive, some investors are looking at new builds, which keep negative gearing, or at commercial property, which the negative gearing changes don't affect. Each has its own risks, and a decision should be based on the fundamentals of the asset, not only its tax treatment.
• Cash flow matters more than ever. With slower rent growth and higher rates, investment properties need to stand on their own cash flow, without relying on tax deductions or rapid capital growth.

What this means for brokers

When banks tighten investor policy, more scenarios fall outside standard bank criteria. That doesn't make those borrowers weaker. It often means their circumstances don't fit a standard bank policy. Common examples include:

• investors with large portfolios whose serviceability has been reduced by the new policies
• borrowers who need to restructure or consolidate investment debt
• investors who need short-term or bridging finance to sell a property in an orderly way
• borrowers moving from residential to commercial property, where assessment works differently.

For these clients, specialist and non-bank lenders can provide funding for business and investment purposes, typically assessed on the security, the exit and the borrower's overall position rather than standard serviceability formulas. Non-bank lending is usually priced higher than bank lending and suits specific situations, not every investor. Brokers should match the product to the client's plan. See Bridging finance explained.

Is the slowdown easing?

There are tentative signs of stabilisation. In August, CBA chief executive Matt Comyn said the fall in investor applications had since stabilised. He also noted the property market was coming off an unusually strong financial year, in which credit growth and investor lending exceeded CBA's expectations.

Still, with values falling, rates high and rent growth slowing, a quick return to the pre-Budget pace of investor lending looks unlikely in the near term.

The Funding Door view

The post-Budget slowdown is a structural change, not a temporary blip. Investors who adjust their strategy, focusing on cash flow, structure and the right asset, can still invest successfully. Brokers who understand both bank and non-bank options are well placed to help clients through the change.