The conversation around property investing has been dominated by what investors have lost.
Borrowing capacity has tightened for some borrowers. Tax incentives have shifted away from established property. Lending policies have changed. Investors who were already questioning whether now was the right time to buy have suddenly found themselves with even more reasons to sit on the sidelines.
And many have.
That’s exactly what happens when the rules change. Some investors adapt. Some redirect their focus. Others decide to wait and see how things unfold before making their next move.
What hasn’t received nearly as much attention is what happens next.
Because while investors can choose whether they buy, banks don’t get to choose whether they grow.
Investors have changed course. Banks haven’t.
The Federal Budget wasn’t designed to stop Australians investing in property altogether. The intention was to redirect investment towards new housing supply and away from established housing stock.
Whether you agree with the policy or not, the objective was clear. Encourage more housing construction while reducing some of the incentives associated with buying existing properties.
The challenge is that markets rarely respond in neat, predictable ways.
Some investors have shifted their attention towards new property. Others are exploring different ownership structures. Some have delayed investment decisions entirely. Some have simply decided to sit this one out and wait for more certainty.
The result is that investor activity has slowed.
For lenders, however, the need for growth hasn’t changed.
Banks still need to write loans. They still need market share. They still need to attract new customers. They still need to maintain the profitability of their lending books.
When investor demand softens, those pressures don’t disappear. They simply shift.
And that’s often when lenders start looking harder for ways to win the business that remains.
When investors retreat, lenders fight harder
Most people assume that when borrowing becomes harder, opportunities disappear.
In reality, the lending market is rarely that simple.
Every lender has different priorities, different servicing models and different growth targets. While some lenders may tighten policy, others will often see an opportunity to capture market share.
That’s one of the reasons we’re beginning to see increased competition emerge across parts of the investor lending market.
Some lenders are sharpening pricing. Others are introducing more flexible servicing policies. Some are targeting specific segments such as SMSF borrowers or investors looking to refinance existing debt.
The common theme is simple.
As investor demand falls, competition for investor business increases.
The lenders may change. The policies may change. The products may change.
But the desire to win quality customers remains exactly the same.
Why a “no” from one lender doesn’t mean a “no” everywhere
One of the biggest misconceptions in lending is that a borrowing capacity reduction from one lender means the opportunity is gone altogether.
In reality, different lenders can arrive at very different outcomes for the same borrower.
Take a recent scenario involving a married couple with one child, a combined household income of $220,000 and a home worth approximately $1.2 million. Their strategy was relatively straightforward. Refinance their existing home loan, access equity and purchase a $700,000 investment property. Under their original approval, the numbers stacked up comfortably.
Following the recent policy changes, however, their lender’s position changed.
If they wanted to purchase an established investment property through the same lender, their borrowing capacity reduced significantly. Instead of purchasing a $700,000 property, they would need to reduce their budget to approximately $570,000.
For many investors, that would feel like the end of the road.
But this is where lender competition starts to matter.
By exploring alternative lenders with different servicing models, the same borrowers could potentially increase their purchase capacity to around $880,000. While this came with slightly higher rates and fees, it demonstrated a critical point: the opportunity hadn’t disappeared, the lending pathway had simply changed
Existing investors are attracting attention too
It’s not just new investors benefiting from increased competition.
Many existing investors are currently sitting on loans that were written years ago under very different market conditions. Others may have found themselves with specialist lenders after being declined by a major bank and have remained there ever since, often paying significantly higher rates.
Historically, moving those loans hasn’t always been easy. Even when a better rate was available, servicing calculators often prevented borrowers from refinancing.
Today, we’re seeing some lenders actively target these borrowers.
Some are introducing more generous servicing policies. Others are reducing assessment buffers for like-for-like refinances. In some cases, lenders are effectively saying, “If you’re already managing these repayments elsewhere, we’re prepared to look at the application differently.”
The goal isn’t necessarily to create brand new investor demand. It’s to win market share from competitors.
For investors who have felt trapped with a lender because they couldn’t meet the servicing requirements of a major bank, that can create opportunities that simply weren’t available 12 months ago.
The result is that some investors who previously felt stuck may now have more options available than they realise.
SMSF lending is becoming more competitive
The third area we’re seeing increased competition is within the SMSF lending market.
Traditionally, many investors considered SMSF property investing too restrictive, too complex or simply too difficult to finance. As lenders compete for investor business, however, some are paying closer attention to this segment.
Using the same example above, if the couple had at least $250,000 combined in superannuation, they could potentially establish a self-managed super fund and purchase the investment property through the fund rather than refinancing their family home.
Instead of increasing debt against their principal place of residence, the property could potentially be acquired using a single SMSF investment loan structure.
Now, that doesn’t automatically make it the right strategy. SMSF property investing comes with its own rules, risks and considerations.
What it does demonstrate is that there are now more pathways available than many investors realise.
And that’s really the broader theme emerging from the current market.
While some investors are stepping away, lenders are working harder than ever to attract the ones who remain.
The biggest opportunity may not be the lender
While lender competition is becoming more noticeable, the biggest opportunity emerging from the current market may have very little to do with lending at all.
As some investors step back, competition for property can begin to ease.
Fewer active buyers can mean more negotiating power. More time to complete due diligence. More room to make decisions based on fundamentals rather than fear of missing out.
That doesn’t eliminate risk, and it certainly doesn’t guarantee success.
But history has shown that periods of uncertainty often create opportunities for investors who are prepared, adaptable and willing to look beyond the headlines.
When fewer people are competing for the same opportunities, the investors who remain often find themselves in a stronger position.
The bottom line
There’s no question the investment landscape has changed.
For some Australians, investing has become more difficult. Borrowing capacity has been impacted and strategies that worked six months ago may no longer work today.
But every market shift creates both challenges and opportunities.
While much of the conversation has focused on what investors have lost, the more interesting question may be what has been created.
Because while some investors are retreating, lenders are fighting harder for the ones who remain.
And for investors willing to adapt, that may be where the real opportunity lies.
Wondering how the recent changes could affect your own borrowing capacity or investment plans?
Every lender is responding differently to the current market, which means the right lending strategy today may look very different to the right strategy six months ago.
If you’re considering your first investment property, your next investment purchase, refinancing an existing portfolio or exploring SMSF lending, our team can help you understand what’s possible and where the opportunities may sit.
Book a free 30-minute finance strategy session and let’s explore your options.
About the Author
Since 2008, David Thomas has built a business aimed at servicing the needs of property investors, owner occupiers and small business owners. David is recognised as one of the top 10 independent mortgage brokerages in the country, David and his team have settled almost billions of dollars worth of residential and investment loans over the last decade.
Known for his straightforward, relatable style, David believes by educating people about property funding; they fare better in the market. By sharing his expertise openly, some of the people he educates will likely become his clients. It's a win-win approach.
David Thomas is a credit representative (Representative Number 506153) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237).