Australia's SMSF sector has crossed a significant threshold, with more than 663,000 funds now holding $1.021 trillion in net assets and new registrations hitting a record 42,293 in the year to June 2025. The trustee base is changing shape: Gen X and millennials account for the majority of newly established funds, and the 30–45 age cohort recorded 31% growth in SMSF membership between 2023/24 and 2024/25. Against that backdrop, SMSF lending is no longer a niche specialism reserved for a handful of operators. Six lenders, La Trobe Financial, ORDE Financial, Bluestone Home Loans, Liberty Financial, Firstmac and Pepper Money, joined Mortgage Professional Australia to examine what the maturing SMSF lending market means for brokers in 2026. Their conversation covers the structural reasons property continues to dominate SMSF portfolios, the growing commercial opportunity among SME owners, the gearing discipline required inside a concessionally taxed fund, the compliance implications of the ATO's May 2025 LRBA guidance update and where process innovation is heading next.
The SMSF market is growing at record pace, with 42,293 new funds registered in the year to June 2025, up sharply from 33,041 the prior year. The largest single cohort of SMSF members, roughly 12% of the total, now sits in the 35–44 age bracket, and the number of members switching into SMSFs grew 21% between 2023/24 and 2024/25. The 30–45 age group recorded the strongest growth at 31%. Gen X and millennials now account for the majority of newly established funds, according to Firstmac chief commercial officer Marie Mortimer. The shift signals a younger, more strategically minded trustee base that is reshaping the conversations brokers need to have.
Property's grip on SMSF portfolios is structural as much as cultural. As of December 2025, non-residential real property held in SMSFs totalled $116.7 billion and residential real property $60.9 billion, together representing around 17% of total SMSF assets. La Trobe Financial senior vice president and chief lending officer Cory Bannister identifies three consistent drivers: trustee control over asset selection, the cultural primacy of property as a store of wealth, and a post-COVID focus on diversification as a counterweight to share market exposure. Property is not replacing other assets so much as anchoring a broader portfolio strategy.
The most common SMSF borrowing deal for SME owners is acquiring business premises through the fund and leasing them back to the operating entity, creating tenure certainty while building wealth inside super. ORDE Financial director of distribution Lee Prior notes that business owners and owner-managers now account for around one in eight working Australians, and that a professional workforce has grown more than 140% over the past 25 years. Bluestone Home Loans recently launched a commercial SMSF product specifically to help residential brokers bridge into that segment, recognising that many brokers already have strong SME client relationships but lack a commercial SMSF pathway.
Limited recourse borrowing arrangements totalled $77.8 billion as of December 2025, up from $52.8 billion in June 2020. Bluestone Home Loans head of specialised distribution Richard Chesworth warns that higher leverage can push a fund into negative gearing, which is far less compelling inside a concessionally taxed SMSF. He argues funds should aim to be neutrally or positively geared as early as possible, and that brokers must test any leverage conversation against the fund's broader strategy rather than treating it as a question of maximum borrowing capacity. Chesworth also notes that 2026 Federal Budget proposals confirm SMSFs retain their existing CGT discounting approach, providing some regulatory certainty for trustees planning long-term property holds.
High-performing SMSF brokers start with structure, not product. La Trobe Financial's Cory Bannister says brokers well connected with financial advisers, accountants and legal professionals are significantly better positioned to deliver strong outcomes, because SMSF lending involves trust structures, compliance requirements and multiple stakeholders. Firstmac's Marie Mortimer adds that strong performers are clear on role boundaries, prepare files thoroughly and set expectations early around documentation and time frames. Pepper Money data shows seven in 10 members switching into SMSFs had no pre-existing advice relationship, which underscores the guidance role brokers must fill even before a loan application is in sight.
The ATO's May 2025 guidance on using offset accounts with LRBAs prompted some non-bank providers to amend their product parameters. Bluestone's Richard Chesworth says his organisation's guidelines were unchanged because the firm has maintained a strong compliance focus since launch. Pepper Money head of mortgages, retail broker Siobhan Williams describes her organisation's response as continuity rather than correction, noting that complex regulation has always been part of the SMSF lending landscape. That consistency matters more as the book scales: Pepper Money's SMSF lending grew 112% year-on-year, which Williams says makes the quality of the compliance framework all the more important.
Most near-term innovation is in process rather than product. Pepper Money introduced the ability for eligible borrowers to access up to 90% LVR on residential SMSF loans without a lender protection fee, and updated its refinancing approach to consider demonstrated repayment history. Firstmac's Marie Mortimer says the biggest opportunity is reducing friction through better digital tools and stronger in-house capability. Liberty Financial general manager commercial Matt Heinnen describes the sector shifting towards smarter digital workflows and more deliberate collaboration, with the goal of making the lending journey faster for the trustee at the centre.