Macquarie Axes Negative Gearing Add-Backs for New Investor Loans

Macquarie Bank has rewritten its investor serviceability rules after the federal budget restricted negative gearing to new builds only.

Macquarie Bank moved swiftly to rewrite its investor credit rules on 18 May 2026, becoming the first lender to strip most negative-gearing tax add-backs from its serviceability calculators for investment loans — a direct response to the federal government's budget decision to restrict negative gearing to new dwelling construction.

For years, lenders have factored projected tax refunds into their borrowing calculations for negatively geared investment properties. When an investment property's costs exceed its rental income, lenders calculate the annual shortfall, apply the borrower's marginal tax rate and treat the resulting tax benefit as additional monthly income. That practice has significantly boosted borrowing capacity for highly geared investors.

Now, with the budget removing that benefit for most established-property purchases, the underlying logic no longer holds — and Macquarie is the first lender to act on it.

What Macquarie's New Rules Actually Mean

The change turns on a single cut-off date: contracts executed on or before 12 May 2026 will still attract negative-gearing add-backs in Macquarie's serviceability calculations. For contracts signed after that date, the bank will only include negative gearing if the property qualifies as a "new build" that "genuinely adds to housing supply."

As [The Adviser](https://www.theadviser.com.au/lender/48450-macquarie-scraps-negative-gearing-add-backs-for-investors) reports, Macquarie formally briefed brokers on Monday 18 May, linking the change directly to its responsible lending obligations.

"In light of the Federal Budget, we have made changes to our investor lending policy to ensure we continue to comply with our responsible lending obligations," a Macquarie spokesperson told The Adviser. "These changes help us ensure property investors are able to afford their loan when the changes to negative gearing come into effect."

The practical impact is already being felt. In one case shared with The Adviser, Macquarie recalculated a pre-approved investment loan after stripping out the negative-gearing benefit, reducing the maximum loan from approximately $1.7 million to $1.269 million — a drop of more than $430,000 on the same income and expense data.

Mortgage broker Alex Veljancevski of Eventus Financial modelled the change for a typical clean-profile investor and found equally stark results: a borrower who could previously access approximately $750,000 — with negative gearing factored in — would see that capacity fall to approximately $600,000. That is a $150,000 reduction, or roughly 20 per cent, despite no change in income, expenses or interest rates.

"A 20 per cent reduction in borrowing power is the difference between being able to buy in a suburb you want to invest in and being priced out of it entirely," Veljancevski told The Adviser.

Tony Xia, director of The Mortgage Agency in Sydney, ran the numbers for clients planning to buy after the 12 May cut-off and found reductions of 25 to 30 per cent. He shared a specific example: a client on a $100,000 salary, living at home with family, carrying only HECS debt, with a proposed rental income of $500 per week. Pre-budget borrowing power was $675,000. Post-budget, it fell to $490,000.

How Other Banks Are Responding — and What Investors Should Do Now

Macquarie has moved earliest, but it is not alone in facing this reckoning. Westpac has notified its home-lending teams that the negative-gearing ban could reduce borrowing capacity for investor clients, though it has not yet changed its policy. National Australia Bank, Commonwealth Bank and ANZ have all confirmed they are working through their serviceability settings in light of the budget changes.

The window for investors relying on pre-budget capacity models is narrowing. Once the major banks finalise their own calculator updates, borrowing limits across the market will shift — in some cases materially.

Macquarie is also tightening how it assesses servicing guarantees for properties held in companies and trusts. From 21 May 2026, applicants providing those guarantees will need to supply further information about how those commitments are being serviced. This applies to new applications only; files lodged before that date are assessed under the previous rules.

For investors already mid-application, what matters is the contract date and when your file was lodged. Macquarie has said it will reach out directly if it needs proof of a pre-12 May contract or evidence of new-build status. The bank is also rebuilding its serviceability calculator and will release the updated tool once ready.

For investors who have not yet signed a contract, the bottom line is simple: your borrowing power for established-property purchases has fallen — potentially by 20 to 30 per cent — purely because of the changed tax environment. Use our [borrowing power calculator](/calculators/borrowing-power) to get a current baseline, then speak with a broker who can model your position across multiple lenders, because how each bank adjusts its calculator will vary.

If you are refinancing an existing investment property, the picture is more nuanced. A dollar-for-dollar refinance of a property purchased before 12 May 2026 will still attract negative-gearing recognition at Macquarie. Cash-out refinances have additional conditions depending on how funds will be used. Check your [refinancing options](/home-loans/refinance) and get your position assessed before lender policies fully settle.

Xia's parting assessment captures the market mood: "I think both new and old-school investors will take a breather to reassess their next investment plans. I think everyone will take time to readjust to what is happening."