Income hasn’t changed, but your borrowing power suddenly drops by $200,000. That’s exactly what’s happening in Australia after May 12. Same family profile, same salary, but the bank now lends you $600,000 instead of $800,000. This isn’t a one‑off — it’s showing up across scenario after scenario.
Let’s take a hypothetical example.
A couple earning $200,000 combined, two kids, a home with a $500,000 mortgage, and they’re looking at a $1mil investment property. A few months ago, under the old rules, their pre‑approval worked on an $800k loan. Today, with the new assessment settings, most banks only offer around six hundred. Their required deposit jumps from $250,000 to $450,000. That’s not a small adjustment — that’s a complete reset of the plan.
So why the sudden drop? Two reasons.
- Negative gearing no longer boosts your usable income. Banks now treat it as simple rent offset, not a future tax benefit. On paper, your income shrinks.
- After three rate hikes this year, your repayments jump, the assessment rate climbs, and your borrowing power drops again.
Does this mean you can’t buy? Not necessarily.
Different lenders treat negative gearing and buffers very differently. Big banks tightening doesn’t mean the whole market is closed. The real solution isn’t finding more deposit — it’s restructuring your existing debt and matching you with the right lender.
If you’re still using pre–May 12 logic to shop for property, you may find your funds don’t match the purchase when it matters most. If you’re unsure what you can actually borrow now, or you feel your borrowing power isn’t enough but you don’t want to miss a good opportunity, please don’t hesitate to message me.
Disclaimer:
This content provides general information only and does not constitute personal advice.
