Why Your Property Investment Strategy based on Trusts could fail in 2026 (And How Tier 2 Lenders Save It)
14 Jan 2026
APRA-driven tightening is reshaping investor lending. If your strategy depends on major banks alone involvign Trusts, your portfolio growth may already be at risk.
The Australian property investment lending strategy that worked for the past decade is breaking down fast. In 2026, big banks are quietly shutting the door on trust lending and investor borrowing capacity. For seasoned investors, relying solely on the majors could mean hitting the end of their journey
The 2026 Investor Frenzy Is Back
Australia is once again in the grip of an investor-led property cycle. More than 40% of property purchases nationwide are now driven by investors—levels not seen for over a decade
While this has fuelled rapid capital growth, it has devastated affordability. Five years ago, first-home buyers could afford roughly 30% of available properties. Today, that figure has collapsed to around 12% nationally.
With sub-$1 million properties rising by double-digit percentages, regulators have stepped in to prevent the market from overheating again.
Why the Big Banks Have Pulled the Handbrake
APRA’s Quiet Influence on Investor Lending
The Australian Prudential Regulation Authority (APRA) exists to protect financial stability. When investor lending accelerates too quickly, banks are forced to reduce leverage, tighten serviceability, and reassess trust lending exposure.
The End of Trust Strategy to Improve Borrowing
For years, sophisticated investors used trusts to acquire property after property, provided each asset could handle it's expenses and were neutrally or positively geared. Accountant letters were enough to exclude debt from future servicing calculations. That era is effectively over as Big 4s are running away from it now.
What Changed at the Big Five Banks
- ANZ: Trust lending capped at 70% LVR and limited to existing customers
- CBA: Trust lending restricted to existing customers only
- Westpac / St George: Trust lending pushed into business banking channels
- Macquarie: Trust lending paused altogether
- NAB: Still active, but with higher rates and strict cash-flow proof
If your portfolio relies on these institutions alone, growth can stall quickly.
Why Tier 2 Lenders Are Winning in 2026
Tier 2 and non-bank lenders are not governed by APRA in the same way as major banks. Because they do not take retail deposits, they are free to assess risk at a deal level rather than a system level.
This flexibility allows experienced investors to continue using trust structures, higher leverage, and alternative servicing models—often at rates lower than NAB’s current trust offerings.
The Real Math: Interest Cost vs Equity Growth
A common mistake investors make is obsessing over interest rates instead of outcomes. /p>
In markets like Perth, regional Queensland, Geelong, Bendigo, and parts of Adelaide, equity growth can dwarf holding costs when assets are selected correctly.
A Warning: Speed Without Strategy Destroys Returns
Many investors are being hurt by relying blindly on buyers agents in hot markets. Without a forward-looking lending strategy, portfolios hit serviceability ceilings far sooner than expected.
Final Warning: Don’t Act Until You Understand
The opportunity in 2026 is real—but only for investors who adapt. The winners will be those who understand lending rules, structure portfolios intelligently, and diversify funding sources beyond the major banks.
Next Step: Get in touch with us if you want to understand the new changes in light of your scenario
Book a strategic lending review to see how far your portfolio can scale under current 2026 lending rules.
