Tate said the reforms targeted a small, specialised and well-regulated segment of the lending market.
“This is a well-understood market that has operated effectively within a clear regulatory framework for many years. Asset limitations already apply to SMSFs and these arrangements are primarily used by Australians seeking to sensibly diversify their retirement savings,” she said.
Naveen Ahluwalia, Mortgage Finance Association of Australia Executive of Policy, said mortgage and finance brokers, who facilitate more than 81 per cent of Australia’s residential home lending, were already seeing investor confidence weaken.
“Mortgage and finance brokers are hearing from investors who are delaying decisions, reassessing future investments and, in some cases, stepping away from the market altogether,” Ahluwalia said.
“SMSFs play an important role in housing investment and restricting access to lending risks becoming another disincentive for Australians willing to invest in residential property. At a time of housing shortages and rental pressures, the focus should be on encouraging investment that increases housing supply, not discouraging it.”
David Gandolfo, Commercial and Asset Finance Brokers Association of Australia Chair of Advocacy, said the decision reflected broader concerns about the impact of recent policy changes on investor and business confidence.
“Commercial and asset finance broking is a real time barometer of business sentiment, and our members are seeing an immediate retreat of capital and business investment under this policy and others announced in the Federal Budget,” Gandolfo said.
Tate added the decision also raised broader concerns about the impact of the Government’s tax reform agenda on credit markets.
“This is another example of the Government not consulting on proposed tax changes that will affect credit availability and Australia’s lending market. Technical amendments will be critical to ensure existing borrowers are not disadvantaged and the transition is orderly,” she said.
AFIA has also raised concerns with the Senate Economics Committee about the potential impacts of the broader tax package on borrower serviceability, collateral values, credit risk and securitisation markets.
The MFAA continued the changes to borrowing rules could have unintended consequences not just for housing investment, but also credit availability and rental supply.
Mortgage and finance brokers are increasingly reporting signs of uncertainty among investors as they assess the impact of proposed tax and housing related reforms. Industry sentiment suggests some investors are delaying decisions, reconsidering future investment plans or taking a more cautious approach to entering the market.
The MFAA believes policy settings should support investment that contributes to housing supply, particularly as Australia continues to grapple with affordability challenges, strong population growth and ongoing rental demand.
The broader finance industry has also raised concerns about the cumulative impact of tax reforms on lending markets, borrower confidence and the availability of credit. Industry stakeholders are seeking further consultation and technical detail to ensure existing borrowers are not disadvantaged and that any transition can be implemented smoothly.
