As at 24 September 2026. Incorporates PKF Lending’s review of 24 September.
Most of our clients hold a mortgage, and many are weighing what the May Budget changes mean for borrowing. We do not arrange loans; where a client’s plan involves lending, we coordinate with finance partners who do. PKF Lending is one of them.
We put a few questions to David Zammit, Executive Director of PKF Lending Solutions, about what PKF Lending is seeing across lenders: valuations, rates, serviceability and how investors are borrowing since the Budget. His answers are lightly edited for length. The views are David’s and PKF Lending’s; what we would add from the advice side is at the end.
You value your clients’ properties each month. What is the thinking, and what do clients do with it?
David Zammit: It came from understanding how lenders actually work. When we run a digital valuation we are not pulling one number. We run it across more than 60 lenders at the same time, and each is drawing on its own valuation panel for that property type and suburb. Because the data differs, the spread can be significant. In our experience, differences of 20% to 40% between lenders on the same property are not unusual. A home one lender values at $1 million might come back at $1.4 million with another.
That difference can represent accessible equity, and the monthly valuation is where that conversation starts.
Beyond settlement, what does your ongoing service look like over the life of a loan?
David: Each month we review every client’s portfolio in the background. They do not need to do anything.
A large part of that is rate management. The rate a client secured at the start of the year may not be the sharpest six months later, so we re-price monthly across our lender panel. If the new pricing is sharper, we take it back to the existing lender. Most of the time they match it and the client saves without anything else changing. When they do not, we present the options and the client decides.
We also watch the yield curve, which reflects how the market is pricing future rates, pass on property market data, and watch lender policy so clients hear about a change that helps them while the window is open.
Some lenders are assessing like-for-like refinances on a much smaller buffer than the standard 3%. How does that work?
David: When a lender assesses an application, it does not test your ability to repay at the actual rate. It adds a buffer on top and assesses you at that higher figure. At the standard 3 percentage points, a borrower on a 6% p.a. rate is assessed at 9% p.a.
Since the Budget, application volumes have fallen by around 30% and lenders are looking for ways to attract business. One of the more significant shifts we have seen is some lenders reducing that buffer to 1 percentage point for like-for-like refinances, where no additional funds are drawn. That changes the amount a borrower can qualify for.
For borrowers who are stretched on repayments, it can open the door to a sharper rate and a lower monthly payment. The requirement is an existing mortgage and no intention of drawing extra equity.
Lenders also differ on whether they recognise the tax deductibility of investment debt. What difference does that make?
David: It has a material effect on borrowing capacity. For debt used to buy or improve an investment property, most lenders recognise the interest as deductible in their servicing calculation, though the treatment has shifted since the Budget depending on when the property was acquired.
It gets more layered when a client draws equity from a property to invest in shares or managed funds rather than property, which is where debt recycling usually comes in. Some lenders treat that debt as deductible in their servicing assessment. Others do not.
It matters because when interest is partly offset by a tax saving, the effective cost of the debt is lower. Lenders who factor that in see a smaller repayment burden and a borrower who can service more. The difference can be substantial, so matching the lender to the client’s structure is a critical part of the work.
David: Pre-approvals for residential investment property have slowed noticeably. People are pausing before committing.
What we are seeing instead is a significant increase in investors using existing equity to move into other assets. Commercial property, shares and business investment are areas where the deductibility of interest has not changed, and investors are increasingly aware of the distinction. The questions have shifted toward how to put equity to work in deductible, income-producing assets, or how to structure the lending if they do proceed with a residential purchase.
Where are lenders becoming more accommodating, and where are they tightening? Is there a divergence between the majors and second-tier lenders?
David: On rates, the major lenders are still competing hard despite lower volumes, which works in borrowers’ favour. Policy is also loosening in areas designed to attract particular borrowers: first home buyers, professionals and the self-employed.
The divergence is meaningful. Most major lenders still apply the full 3 percentage point buffer. Almost all second-tier lenders we deal with are now assessing at 1 percentage point for like-for-like refinances, which changes who qualifies and for how much.
Second-tier lenders also run a lower-documentation model, often assessing on two self-declared documents where a major wants full income records and bank statements. The trade-off is more risk on their side and rates that sit a little higher. Their policies are more flexible too. ATO debt is a good example: a major lender will not fund the payment of ATO debt, but a second-tier lender often will, and for a business paying interest charges on that debt the saving can be substantial. In addition, interest paid to the ATO is no longer deductible, whereas if you borrow from a lender to pay off the ATO debt, the interest on that loan is deductible.
What is the most common thing borrowers get wrong before they come to you?
David: Three things.
- First home buyers not having a pre-approval before they start looking. Without one there is no certainty about what they can borrow, and they often miss the property they want because they cannot move as quickly as needed.
- Investors using personal cash, or cash sitting in the offset or redraw of a non-deductible home loan, for income-producing assets when they have equity they could draw on. Where debt is available and the interest is deductible, paying cash is often not the most efficient approach.
- Going straight to one lender without testing the market. Every lender assesses your position differently and arrives at a different answer.
What we would add
David’s answers are about what is possible. A few things from the advice side.
- Borrowing capacity is not a target. A lower buffer means a lender will approve more, not that you should take it. APRA’s standard 3 percentage point buffer exists to cover rate rises and changes in your income over the life of the loan. If a 1 percentage point buffer is the only reason a refinance works, pause.
- Deductible is not the same as suitable. Interest on borrowing to buy income-producing assets is generally deductible against that income, and the Budget did not change that outside residential property. But gearing magnifies losses as well as gains; the tax saving lowers the cost of the debt, not the risk. Whether to borrow, and how much, depends on your circumstances, and tax outcomes are for your accountant.
- A higher valuation is information, not a decision. What to do with equity is a separate question.
- Know who is doing what. David and PKF Lending provide the credit advice, under the credit licence named below. We coordinate the lending with your broader plan, so the borrowing and investment decisions are made together.
Speak with an adviser
If this affects you, it may be worth reviewing your position before making changes. If borrowing is part of the picture, we can coordinate with PKF Lending or another finance partner so the pieces fit together.
This article is general information only, current as at 24 September 2026. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information, consider whether it is appropriate for you and seek advice tailored to your circumstances. The views attributed to David Zammit and PKF Lending are theirs, based on their observations of lender behaviour, and are not statements of fact about any particular lender. FinPeak Advisers does not provide credit advice or arrange loans. David Zammit, Executive Director of PKF Sydney, is a credit representative (549385) of BLSSA Pty Ltd ACN 117 651 760, Australian Credit Licence 391237. Tax outcomes depend on individual circumstances; speak with your accountant or registered tax agent. FinPeak Advisers ABN 20 412 206 738 is a Corporate Authorised Representative No. 1249766 of Spark Advisors Australia Pty Ltd ABN 34 122 486 935 AFSL No. 380552 (a subsidiary of Spark Financial Group ABN 15 621 553 786).
David Zammit of PKF Lending on valuations, rates, serviceability and how investors are borrowing since the May Budget, with a note from the advice side.
