Banks Are Changing Trust Lending Rules in 2026

Off the press, banks changing rules. APRA maybe gave the nudge. There was a lot of panic. Wild policy that would just allow you to borrow endlessly, like literally. A little bit irresponsible, maybe.

Blurred lines lending, unlimited borrowing, and do this, do that, save tax. That's all gone. Even real estate professionals are going to come under the new anti-buddy laundering. It's sweeping everywhere. I think there's something they're not telling us.

Extra research that they'd have to do on their assessment. So I think they've just gone, nah, brokers are freaking out. I'm sitting there going, how good? Your whole life's got to change, but they don't want to do the whole life change. They want to look for the silver bullet.

It's almost like to be a sophisticated investor now, I'd be surprised if you don't have lending going to the smaller banks or brokers. All these extra requirements of admin just to get a deal across the line. Nerd alert! The Property Nerds, the home for data-driven property investors, where we uncover Australia's hot and cold markets, latest headlines and trends. We're back for another episode, the new look nerds.

Adrian no longer with us on the Property Nerds. I just feel like no longer with us. That's heavy. That's heavy, hey. It's like, what are we saying?

Adrian's definitely with us. I talk to him every day. Yeah, absolutely. He's with us. The star's there.

It's more Adrian's going to be back for future episodes. So it means he's going to be back in to do some super deep property strategy episodes, which is cool. And two's company, three's a crowd as well. Yeah, absolutely. Absolutely right.

But I think what's going to be special is Adrian just coming back, joining us from time to time for a few feature episodes. His next episode coming up, he'll be joining us to talk about his portfolio, which is something that many people haven't heard about. But today's episode, it's going to be special because hot topic, off the press, banks changing rules, this and that and trust. I want to go into more of that, Jack, and pick your brain just because it's obviously been a big part of people's strategies in terms of building wealth. And I want to just figure out, firstly, for those who are like, oh, trust changes, what's happening now?

Yeah. What's changing in this landscape and why is it changing? So for people who aren't unaware. Yeah. So the answer to that has changed over time.

I think when the first one to come out and do it, obviously Macquarie, it was big news because they were the main lender that really everybody used for trust lending for a couple of reasons. One was they didn't load the interest rate for trust lending. Most of the other major banks, if you're doing a trust loan or a company loan, they'll give you special pricing, whereas Macquarie would just give you the carded rate and it was really competitive. So by far the best rates. Everyone was going to use Macquarie, right?

Other than that, they had a pretty wild policy that would just allow you to borrow endlessly, essentially, like literally. And when they came out and said that they weren't going to do trust lending anymore, there was a lot of panic. And there was a lot of like, I'd obviously try to talk to as many different brokers, BDMs, and just get an understanding for what really was happening. But really, I think what it came down to was that they must have heard something from a regulator or there might have been a bit of a spotlight put on them because it was a little bit irresponsible, maybe. But yeah, I think as well, there's going to be some new anti-money laundering rules that are coming out for identifying people in the trust.

So for lenders, brokers, everyone's just going to have additional requirements for trust lending. Even real estate professionals are going to come under the new anti-money laundering stuff to actually like state and collect details. So it's sweeping everywhere. So what it means is that there's just more admin involved from the bank side, which means there's an additional cost, which means that they'd probably have to relook at their loading on the rate, which adds a whole nother level of complexity in the back end because they're all about super fast processing times. And they've been able to maintain that for a very long time.

They've always been the quickest, the most seamless. But I think with the trust stuff, it was getting out of hand. And with all the things that I heard about why they were doing it, more lenders came out and started doing it as well. Most of the major banks have come out and said, we're not doing any trust lending for new to bank. It's only for existing customers.

Yes, I think CBA went on next and said, we'll do trust for existing customers with six months history or more with us. And then some others have come to the party. So what did some of the other big four? ANZ did the same thing. Westpac and St.

George, they went into the market. They went out of the market because they needed to build up their systems. And they were really bullish on competing in the trust landscape. And are all the reasons to not do it the same for all of them? Are there different reasons?

Are there different qualification criteria to do it? I think that's something they're not telling us. Because there must be something going on. All the majors have come out and do that. There must be something going on in the background with regulations and stuff like that.

Because trust lending, company lending, it's not regulated. It's not the same as just doing a normal home loan in your personal name. So a couple of the lines are a bit skewed on that type of lending. So yeah, there might be some changes coming into it. But I think when you boil it down, that stuff isn't...

That blurred lines lending isn't the reason. That's not the primary reason you would set up a trust. I know some, not your buyers agency, but I know a couple of buyers agencies because I'm friends with the brokers that work with them. And a lot of their business is built on the endless strategy and unlimited borrowing and do this, do that. That's all gone.

That's all gone. And it wasn't responsible. It's not something... It's definitely not right for everyone. And yeah, it's just...

I think when you boil down trust lending, the primary reason for buying a property in a trust is to save tax. Long-term save tax, asset protection. Those things I don't think are going to change. The rules around the taxes and all that, it's not going to change. Lending, I think that would tighten up.

We're seeing with all the majors coming out of it, it's more of a third-tier space or non-lender, non-bank lender space now. Yeah, and on the non-lender space, that's a good point, a segue to which is firstly, people who are looking at trust lending and you now have non-lenders, it still technically means it's available. And it still technically means it's a strategy that can deliver the outcome of extending borrowing capacity if that fits within what your advice is. Yeah, since all this happened, our trust volume hasn't changed. Okay.

Because the reasons for clients setting up trust, it wasn't for irresponsible endless borrowing. It was for long-term asset protection, planning, tax savings, right? The questions that are asked to people about whether or not they should set up a trust is like, do you have dependents that are going to be over 18 at the time you sell or get a positively geared property? Do you have parents that are alive and well and will be for a long time for you to be able to distribute gains to them? It's got nothing to do with endless borrowing and all this crazy stuff.

So it didn't, I know that a lot of people got freaked out by it because their businesses were built on trust lending. But for us, didn't notice much of a difference. And that reminds me of a stat that we pulled out recently. Like we did portfolio plans for now 1,600 clients of ours. And when we did it, the average properties it took for them to reach their goal was 3.

1. So it just shows you it's not reliant or built on achieving a six-figure passive income through 10 properties in 10 years. And I feel like just in general in the Australian property landscape is that so many people in their aspirations of wealth building are inspired by like inspirational stories. And what I mean by that is like, it's not an issue if the story is we've had these properties and we purchased them. Where the issue is that when you compare them to situations that aren't like yours, like the people with the hundreds of properties, the millions and tens and tens of millions of properties, like even my own example, it's not comparable to the everyday Australian.

So the everyday Australian can't use that and go like, I'm now going to do that unless they're willing to change their complete trajectory of career, complete trajectory of personal financial habits, relationship with their partner and how they're aligned versus how someone else might not be aligned. Like your whole life's got to change. And so then what happens is they follow these people or they follow the ways, but they don't want to do the whole life change. They want to look for the silver bullet. And then when they explain the silver bullet, people use fancy words like, oh, it's my blueprint, it's my strategy.

And the strategy is this lending stuff that you're talking about that crosses that line of going, do you really need it? Because some people don't. And we've seen people build their portfolios without it, but then we've seen some people use it, but they're using it with those things. Like you said, the right intent in mind. One day I might have kids.

One day I might want to distribute certain things in the guidance of And non-banks, brokers, again, are coming to the party to give the customer that extra wealth opportunity to grow their wealth through property. I'm surprised the majors haven't come back into it. Do you think we'll see the same thing with trusts where the majors just don't come back into it? Or do you think this is just some breath of fresh air that they need to take? They're reassessing policies, reassessing regulation, and the banks won't want to miss out and they'll come back to trust lending?

Because I'd imagine this would be a big portion of Macquarie's business, some big portions of some of these businesses. Funny enough, it's not. And when I've had some discussions about if it's coming back, most of them just say no, like it's not. And I was shocked to know the ratios of the amount of trust lending that Macquarie did. It wasn't nowhere near as much as what they do in personal name because people love going to Macquarie for fast, cheap, simple, like it's great.

You know what that makes me think? Sometimes being in our own community makes us overblow out of proportion the scale of things. Yeah, 100%. Because this is the Property Nerds podcast. And we're dealing with investors.

So we see a lot of trust lending. So the percentages of our trust is, yeah. We speak to other professionals. We speak to investment professionals. We have fellow nerds on the show, fellow investors speaking to us.

So it almost feels like it's our own bubble, right? Some stats that make me think that you're right now, it makes total sense. It's like there's over 550,000 transactions in Australia each year. We're in the top five largest buyers agencies in Australia, and we don't see 1% of that. So it clearly shows that we're in a bubble.

Investment-ish. So when you're in a bubble of investors and thinking of this, and people might be using the bubble word wrong here. People think bubble isn't like pop, but I'm thinking like your own bubble isn't like your own space where you talk the lingo. We talk investors. We speak to investors.

We just want to know about investing. Trust lending and all these different types of lendings and third banks and multiple tiers of banks. Are you seeing now customer appetite just shift way more than ever in terms of which banks they're willing and comfortable to go to? Only because I remember back in the days, people used to have this thing like big four banking was safe. Yeah, 100%.

But it almost feels like that's out the window now. I definitely don't see as much of it. It's still there. Still, some clients just purely don't want to go to a non-major bank or non-bank lender, even if the rate's the same or better. It's a real thing.

But what's the downsides of it? Because I think in my head, I'm like, I get the whole savings. Remember how there's a savings government guarantee. People feel comfortable, small bank crashes, things like that. But we're taking our debt here.

I think it's that. But it's the opposite, right? We're taking our debt. You owe them money. So if they go bust, what happens in that scenario?

If something happens there, it's not like they got your cash. Probably a bigger company would just buy the debt and you'd owe it to someone else. If someone knows, send us a DM. Obviously, it's a good thing that we don't know it because Australia is the lucky country where we don't have these things. I mean, touch wood happen a lot.

But what happens for those who might have been through it in generations of the past or anything? Send me a DM. I'd be keen to know. Just basically like, okay, so savings, I can get it. Guarantees, government staff, I'm not moving banks because of this.

But debt, do they just wipe it? Someone else buy it? Does a bank take over? Do you have to sell your property just because you owed them debt and now they don't want to give you debt anymore? They recall it.

It'd be interesting to know. But I mean, that aside, do you find just people also just have this misconception with smaller banks? Only because I feel like now you look at the playing field, larger borrowing capacity, more flexibility of options available, self-managed super fund, and further trust lending. It's almost like to be a sophisticated investor now, I'd be surprised if you don't have lending going to these smaller banks through a broker. 100%.

But you're also like, because I'm the head of the broker division for financial, right? And we get some of the brokers, they come to me with a client. They're like, I've got this really difficult client. They're comparing what I'm offering to the bank and all that. So sometimes we might lose out by rate.

You get a business banker that's a killer. They can get special pricing and all that. I'm like, look, if you're going to lose a client on rate, that's fine. Because what they don't realize is the $50 a year they save on interest, they're going to lose a lot more than that in the long run by aligning themselves with a business banker who wouldn't know their way around strategy in a million years. It's a pivotal part.

I remember having interest rates with high fours and low fives in the front in 2020 when people had interest rates of twos and threes back then, sometimes even 1. 99s. And the reason isn't just to slam out rate shopping. The reason is to go what the right team around does is you think beyond just the next purchase. You're thinking multiple properties ahead.

You're thinking reverse engineering end goals. You're thinking not just the rate for the current, but the future purchase that you could get that someone else might not get. No major would have approved me back in 2020 for the debt that I was after. And then it wasn't until 21, 22 when your incomes and numbers changed, suddenly they all want your business again. So I feel like having the right options, the right team, the right strategy, when you get past three or four properties, I find as well, is that the person who unlocks the next one is really who helps you and thinks of it not just from the next one with the rates that have just been, but you would much rather from the wealth that you've generated from three or four properties realized, I would rather have that extra one than have these three perfected.

Because that extra one, the opportunity cost of not being able to have the right strategy to get you that extra one or two properties and what it can do for your wealth, there's no level of interest rate savings. You can count the beans and move all the dials that you want. There's no level of interest rate savings that could get you in a better position than having one or two extra houses for the next 20 years. So debt's washing itself away with inflation anyway. Debt's going to wash itself away as rents grow and incomes typically grow.

And even if you're on interest only, didn't pay us in down, that extra rate saving isn't anywhere near as important as the right strategist who can go, here's that extra purchase that you couldn't get before that now you can. And here's how you get the one after it, all because of the right strategy. Yeah. And I think people underestimate a good relationship with a professional, someone that they can trust and rely on, give them confidence to move ahead, call upon at any time. When you've got longevity with a professional and a good relationship, someone that you can just call up, you're not going to get that same level of understanding and trust when you just go shopping around with a business banker or any new broker, people that can just up and leave at any time.

100%. Imagine passing your paperwork as well, like four or five times as well. I know that paperwork is my worst enemy when it comes to building a portfolio. But Jack, really good update on trust lending, the future of it, where we're at right now. Fouracre Financial.

com. au, check them out. And I hope you enjoyed the new look and feel for the Property Nerds podcast. See a lot of new looks and feels throughout 2026. We'll keep mixing things up and bring out more down to the ground truth of finance episodes as well.

Because I've said it before, property is a game of finance. We've got to understand both sides of it. And who better than Mortgage Freeman here with us to get that right. So catch you in the next episode. Thank you so much for tuning into this podcast.

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