Macquarie freezes new trust and company lending

The bank said the freeze reflected its response to rising application volumes, investors' borrowing strategy, and the increasing complexity of lending to these structures.

PRD Real Estate chief economist Asti Mardiasmo said the news will shake the investment market, as other lenders could follow Maquarie’s move to halt trust and company lending.

“The pause on trust and company lending will complicate matters for investors using these structures to finance developments, commercial projects, infrastructure, or mixed-use residential properties,” Mardiasmo told SPI.

She said that the freeze on trust and company lending will particularly impact investors using pooled or syndicate structures for niche developments or commercial projects, making them cautious about financing their ventures.

“Any project, whether it's being built, repurposed, or whatever, it's going to need investment, it's going to need capital.”

“The commercial and investment sectors are already overregulated, and this new restriction adds yet another barrier, complicating projects for developers and investor trusts.”

“It will play havoc with deadlines, completion times, and asset acquisitions, causing delays and disrupting both purchase and ongoing development projects,” she said.

Macquarie said one reason for pausing trust and company lending was the growing loan demand, driven in part by strategies circulating on social media that encourage borrowers to maximise lending through these structures.

“With application volumes increasing, we’re adjusting our approach to ensure we continue delivering market-leading turnaround times and high service standards for brokers and customers,” the bank said in an email sent to brokers.

Additionally, the lender pointed to the upcoming anti-money laundering (AML) Tranche 2 regulations, which will add additional checks for trust and company loans, increasing complexity and extending processing times for banks, brokers, and borrowers.

Last month, industry bodies flagged a rise in speculative marketing, conflicted conduct, and unlicensed financial advice as a growing risk in property investment.

The warning highlighted risky practices, particularly among buyer’s agents, and noted that some brokers using social media may expose themselves to conflicts of interest and potential regulatory breaches.

Property Investment Professionals of Australia (PIPA) chair Lachlan Vidler said responsible lending remained crucial, and lenders must communicate concerns and uphold standards if certain practices risk breaching them.

“From an investor's point of view, the finance strategy is an essential pillar of any property portfolio,” Vidler told SPI.

“But it's crucial to remain responsible in your investment journey and also not make irresponsible financial decisions based on potential advice from places like social media.”

“Investors need to be aware of where they're getting their financial advice and that it's from a qualified professional, and surround themselves with good advisors.”

Macquarie confirmed that its main home loan products remained unchanged for individual borrowers, including owner-occupiers and those earning pay-as-you-go (PAYG) or self-employed income.

The bank will still accept income from trusts and companies for individual borrowers, and the change will not impact existing home loans held by trusts or companies.

Applications for new lending to trusts and companies received by 30 October will receive “enhanced assessment”, Macquarie concluded.

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