2025 Investor Lending Crackdown: What Property Investors Must Know

Reserve Bank of Australia

As 2025 draws to a close, Australian property investors are facing a wave of significant changes to how banks assess lending, especially for those using trusts and company structures. While much of the conversation this year has focused on rising prices and affordability pressures, changes behind the scenes in the lending space could have a far greater long-term impact on investor strategy.

The shift began when several major banks moved to tighten or restrict lending to non-individual borrowers. In October, Macquarie Bank announced it would temporarily pause all new home loan applications for trust and company borrowers. This decision was made in response to growing risk concerns and in alignment with broader regulatory sentiment. Around the same time, Commonwealth Bank of Australia (CBA) introduced restrictions for broker-introduced applications submitted under a trust or company. CBA now requires these borrowers to already hold an existing lending relationship with the bank for at least six months. Without this history, applications may be declined outright.

These moves are not isolated. They reflect a broader trend being pushed by Australia’s banking regulator, the Australian Prudential Regulation Authority (APRA). APRA has warned of a build-up of risk in the housing finance system as investor lending accelerates and household debt climbs. To counter this, APRA has announced the activation of new debt-to-income (DTI) lending restrictions starting from 1 February 2026. These new rules will cap the number of high-DTI loans that lenders can approve, limiting the share of loans issued at six times income or higher to no more than 20 percent of new lending activity. This will apply separately to both owner-occupier and investor segments.

The timing of these changes is no coincidence. Recent data shows that investors now account for two in every five new home loans in Australia. Between July and September 2025, investor lending surged to record levels, driven by strong rental yields, low vacancy rates and ongoing demand for housing. With investors becoming more dominant, APRA and the big banks are concerned about the system’s ability to manage risk, particularly in the event of further inflation or economic shocks.

Trust and company structures have long been popular with investors looking to optimise tax positions, protect assets and borrow strategically. However, lenders are now viewing these structures as high risk. Complex ownership arrangements can mask exposure, and some borrowers have used trusts to bypass standard borrowing limits. These new restrictions mean that many investors using trust-based strategies will face lower borrowing power, stricter scrutiny, and potentially longer approval timelines. In some cases, investors may be forced to rethink their structure altogether.

All of this points to a broader change in the way property investment is being regulated and financed in Australia. The era of high-leverage investing through layered structures is coming under pressure. Investors who have built strategies around aggressive expansion or relied on trust vehicles to maximise borrowing may need to reassess their approach heading into 2026.

While these changes do not spell the end of trust lending entirely, they do introduce new barriers that cannot be ignored. Investors using trust or company structures should stay informed, review their borrowing position carefully, and seek advice from professionals who understand both the lending and legal implications of these changes.