Commonwealth Bank has followed Macquarie by showing caution when it comes to lending through trusts. (Source: Getty/AFP) · AFP via Getty Images
Commonwealth Bank has pumped the brakes on a certain type of home lending as concerns grow that speculative investor loans are getting out of hand. The major lender has now followed another bank in taking a more cautious approach when it comes to a growing trend in the Australian housing market.
Commonwealth Bank has informed mortgage brokers that it is not financing any further property lending through trusts or companies for new customers. Only borrowers who have been with the bank for at least six months will be able to borrow in such a way.
A spokesperson for Commonwealth Bank told Yahoo Finance the new rule, which came into effect on Saturday, was due to “market developments”.
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The move follows Macquarie Bank which completely cut off all property lending via trusts just over three weeks ago due to concerns the borrowing method was being widely promoted on social media and becoming more popular.
“Borrowing via a trust or company is a very small part of the market and of our home lending, but has recently become the focus of attention on some social media platforms,” a Macquarie Bank spokesperson told Yahoo Finance.
“The changes we’ve made are part of our ongoing focus on responsible lending, ensuring our customers only take on finance suitable to their individual circumstances.”
Commonwealth Bank CEO Matt Comyn told parliament last week that investor lending has risen to a level that is probably not sustainable.
While the Commbank crackdown is not as comprehensive as Macquarie Bank’s decision, other major banks will likely follow suit, Sydney mortgage broker Nathan Linton told Yahoo Finance on Monday.
“People are going in uneducated,” he said of the increasingly popular borrowing strategy.
“There’s a lot of buyers agents and some mortgage brokers on TikTok and Instagram that spruik the strategy as a way to circumvent borrowing capacity restrictions that APRA have,” he said.
Investor property loans have spiked in 2025. (Source: Getty) · Getty Images
APRA, the prudential regulator, forces banks to assess mortgage applicants on their ability to pay in the event interest rates rise by 3 per cent. However if the investment property is purchased by a trust or a company, then that serviceability buffer can be circumvented, Linton explained.
“Now you’ve got people playing the game and basically tapping into unlimited borrowing capacity,” he said.
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Commonwealth Bank will not stop such lending for current customers, but any new customers coming through its broker channels will need to take out a product with the bank for at least six months to be eligible.
“You can be called an existing customer just by taking out a credit card, holding it for six months. So it’s not like a hard stop, but rather kind of a slowing of the burn,” Linton said.
Commonwealth Bank said it was aware of the social media trend but that was not the sole reason for its decision.
“We regularly review and simplify our processes and policies in line with market developments to ensure they remain competitive and meet our customers’ needs, while maintaining prudent lending standards,” the CBA spokesperson told Yahoo.
“As part of this ongoing process, we are adjusting our home lending policy for non-individual borrowers using Company and Trust structures.”
Linton said it behooves the bank to get ahead of the problem before regulators enforce their own crackdown.
“I think that they want to avoid future fines, future scrutiny from APRA if they’re seen to be turning a blind eye to what is a very aggressive lending strategy,” he said.
Investors made up more than 40 per cent of new mortgage loans in the latest quarter, raising concerns APRA would have to step in to cool the market.
Speaking to MPs as part of the House of Representative’s Economics Committee last week, CBA boss Matt Comyn said the current situation was “probably pushing a higher level than perhaps policy makers and regulators might be comfortable with”.
“Our view would be that a more sustainable credit growth rate in housing would be slightly below the current level,” he said.
Greens senator Barbara Pocock last week called on the regulator to slow investor lending, saying the “increase in credit growth – which is the largest unacknowledged leviathan of house price inflation” needs to be curtailed.
“Australia needs to get back into the business of giving loans to owner occupiers rather than property investors,” she said.
When property is bought through a family trust, the income gained from that investment, as well as the capital gains, are taxed at the beneficiaries’ marginal rates.
This means high-income earners can potentially lower their taxable income by distributing to beneficiaries in lower tax brackets because the property is technically not in their name.
That aspect also helps trustees in the event of bankruptcy or legal action.
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