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CBA unit BankWest set to axe negative gearing tax breaks
Bankwest is set to rock the $1 trillion mortgage market and more than 1.5 million property investors by axing negative gearing benefits that drive lucrative residential property investment, particularly in Melbourne and Sydney.
The bank – owned by Commonwealth Bank of Australia, the nation’s largest mortgage provider – will announce on Monday 20th Feb that generous tax breaks will not be allowed for calculating loan eligibility for new – and some existing – borrowers.
Without negative gearing, the amount of loan a borrower can get will be lower. Perth-based Bankwest’s decision could lead to a shake-up in the nation’s rental sector, trigger a scramble by competitors to poach disaffected customers and cause highly geared investment properties to flood the market.
The bank is expected to introduce the changes at 8pm (AEDT) by amending serviceability calculators used by mortgage brokers to assess loan eligibility. It will apply to all new loan applications and existing loans that require “reassessment” when banks review and adjust downwards pre-approved or issued loan balances.
CBA, which last week followed Bankwest's decision to pull property investor loans, is widely expected to replicate the decision.
Source: Australian Financial Review
So, the earliest signs are selective levers are being pulled for individual lenders to control their exposure and levels of their loan books. They can impact the levels a borrower may be able to borrow funds, by simply adjusting their loan calculators to not account for negative geared losses.
This may simply be in advance of APRA feeling the need to increase control over the Sydney and Melbourne markets.
NB. This one lender changing their lending criteria and calculations - Not a Negative Gearing Policy change. The current Government has clearly stated it will not be touching the topic of negative gearing at policy level any time soon.