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Westpac and ORDE Financial are the latest lenders to outline policy changes following the passage of the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 on 25 June, which also included the Greens’ amendment banning new limited recourse borrowing arrangements (LRBAs) for residential property within self-managed super funds (SMSFs).
The major bank and the non-bank lender join a growing list of lenders no longer factoring negative gearing into serviceability calculations where borrowers are no longer eligible under the new rules (which take effect from 1 July 2027).
Westpac had initially adopted a wait-and-see approach, saying it would update its policy once the legislation was finalised and its internal credit work had been completed.
Westpac updates credit policy
As the last major bank to move, Westpac has now said its updated credit policy and supporting procedures will apply from 29 June, with changes designed to ensure its serviceability assessments comply with the new legislation.
The bank said brokers will now need to distinguish between negative gearing and rental income tax deductions (RITD), while revised eligibility rules will apply depending on a property’s type and when it was acquired.
Under the updated policy, negative gearing can only be applied in serviceability where a customer meets the lender’s eligibility requirements, with the legislation limiting access to the tax benefit on some investment properties purchased after 7:30pm AEST on 12 May 2026.
For new lending applications, brokers are required to first assess whether a customer can service the loan without negative gearing or RITD. Where a tax deduction is required, applications must be assessed using Westpac’s updated serviceability calculator.
The lender has also introduced mandatory procedures for investment home loan applications, including documenting customer conversations in ApplyOnline and completing declarations confirming property acquisition dates, eligibility, and that independent tax advice has been recommended.
ORDE recalculates
ORDE Financial has also updated its servicing policy following the legislation’s passage, saying that all loans not yet unconditionally approved will be subject to a negative gearing eligibility test from 29 June.
Any applications that previously relied on negative gearing but are no longer eligible under the new rules will need to be reassessed using the lender’s updated servicing calculator.
ORDE said the calculator has been updated to allow brokers to identify whether a property or debt is eligible for negative gearing, with guidance provided for a range of lending scenarios.
The lender said established investment property purchases remain eligible where the contract of sale was executed before 12 May 2026, while refinances remain eligible where the acquisition date was before that date. Additional borrowings through cashout refinances can also qualify where the funds are used for an eligible purpose.
For owner-occupied properties converted to investment properties, eligibility applies where the acquisition date was before 12 May 2026, while several new-build scenarios also remain eligible under the updated policy.
ORDE also said commercial property purchases, refinances, and equity releases used to acquire commercial property remain eligible for negative gearing, along with equity releases used to invest in shares or other income-generating investments.
Playing field largely shifted
Westpac and ORDE join a growing list of lenders who have now reprogrammed their serviceability calculations to reflect the removal of negative gearing from most scenarios.
Macquarie was the first to act, updating its calculator on 18 May to remove most negative gearing tax add-backs for investment properties that fall outside the new rules. Great Southern Bank followed on 21 May, while National Australia Bank and Connective Horizon announced policy changes on 26 May.
Suncorp Bank then advised brokers that applications not unconditionally approved by 27 May would be assessed under the new framework, before parent bank Australia New Zealand Banking Group confirmed similar changes a day later for applications yet to receive unconditional approval by 28 May.
The Commonwealth Bank of Australia told brokers that it was rewiring its servicing calculations on 28 May as well.
ING then changed its policy on 15 June, outlining transitional arrangements for applications that are already in the pipeline.
[Related: Senate urged to soften negative gearing and CGT reforms]
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