Bankwest’s discontinuation of negative gearing benefits for new and some existing investor housing loans is being used by Australia and New Zealand Banking Group (ANZ) and National Australia Bank (NAB) as a marketing opportunity to attract disgruntled borrowers looking for alternatives.

Bankwest, which is owned by Commonwealth Bank of Australia (CBA), confirmed yesterday that generous tax breaks would no longer be considered when calculating loan eligibility for new borrowers. Without negative gearing, the loan amount a borrower can get will be lower.  

In response, ANZ has written to mortgage brokers, offering a $1,200 rebate for new home or residential investment loans in an attempt to win over new customers who won’t be able to use negative gearing as part of their loan calculation.

Bankwest’s latest amendment will not impact ATO deductions that can be made at the end of the tax year, such as rates and maintenance, and most major-listed banks still include negative gearing when assessing loans.

“This sudden change is brutal. If Bankwest reviews approved loans in their pipeline, then the implications to investors are substantial and far-reaching,” Miriam Sandkuhler, founder of buyer’s agency Property Mavens, told the Australian Financial Review.

Case in point: investors who have received in-principal approval to buy at auctions could find their approval revoked and revised “at the eleventh hour.”

The latest amendment follows earlier announcements by both Bankwest and CBA of their plans to dial back on some investor loans.

Neither Bankwest nor CBA have provided detailed reasons for these recent changes other than to satisfy APRA’s guidelines, which is understood to mean the 10% speed limit.