Pepper Money, Resimac, Liberty and others warn a rushed ban on SMSF borrowing will lock ordinary Australians out of property-backed retirement planning
Australia's non-bank mortgage lenders have united to criticise the federal government's decision to ban new limited recourse borrowing arrangements (LRBAs) for residential property within SMSFs, warning the measure will harm the retirement savings of ordinary working Australians while doing little to address housing affordability.
The warning echoes concerns made by the broking industry associations.
The joint industry statement, released on 25 June, was signed by eight of Australia's leading non-bank lenders. According to data cited in the statement, SMSFs currently hold approximately $75 billion in LRBA-supported assets backed by $28.9 billion in debt – equating to average gearing of just 39%, well below comparable residential property lending outside superannuation.
The government itself has acknowledged that LRBAs represent less than 1% of total residential property lending and less than 0.5% of new residential lending each year.
The signatories to the statement are:
A rushed and blunt measure
The industry's primary objection centres not just on the policy itself but on the manner of its introduction. The ban was announced without industry consultation and includes a transition period of just 45 days after Royal Assent – a timeline lenders described as unworkable for borrowers and businesses with deals already in progress.
Calvin Cordle, chief executive of RedZed in Australia, highlighted the immediate disruption: "There are pipeline deals, signed contracts, approved loans and scheduled settlements now facing a 45-day deadline. These are not speculative – they involve real people who have already incurred costs in reliance on a well-established framework. The Government must urgently clarify how these borrowers will be treated."
Mario Rehayem (pictured, right), chief executive of Pepper Money, questioned the evidentiary basis of the policy. It “responds to yesterday's market, not today's”, he said. “The system has evolved, the guardrails are stronger, and the rationale for a blanket ban does not stack up. This change does not target residential property speculation and will not move the dial on housing affordability."
Who really uses SMSF residential lending?
A central argument of the statement is that the government's policy rests on a misconception about who uses SMSF residential lending – and who will be hurt by its removal.
Pete Lirantzis, chief executive of Resimac, pushed back on the assumption that SMSF borrowers are high-wealth investors. "The premise that SMSF residential property borrowers are wealthy is far from the truth. Our portfolio reflects a broad range of Australians, many using relatively modest SMSF balances as a pathway to a form of home ownership."
Marie Mortimer (pictured, centre), chief executive of Firstmac, warned of long-term consequences. "For many SMSF trustees, this is not about speculation, it is about using their superannuation as a practical pathway to own property for retirement and build long-term financial security. Removing that option risks locking Australians out of the property market and leaving them facing a lifetime of renting in retirement. This also runs counter to the Government's stated objectives and, in practice, property within SMSFs will now only be accessible to those wealthy enough to purchase outright, rather than ordinary Australians in their thirties, forties and fifties planning for retirement."
Mark Jones, chief executive of Bluestone Home Loans, echoed that concern. "SMSFs are not just for wealthy or older Australians. Many younger Australians are actively engaging with their retirement savings. This policy risks penalising those Australians taking responsibility for their financial future and removes a viable pathway for building retirement security."
Competition and diversification at risk
The statement also raises structural concerns about the impact on lending market competition. The major banks largely withdrew from SMSF lending over the past decade, leaving non-bank lenders to develop specialist expertise and serve this segment of the market. The ban is expected to fall disproportionately on that sector.
James Boyle (pictured, right), chief executive of Liberty Financial, said the policy would eliminate a tightly regulated service. "While it's a small part of the broader lending market, for working Australians with an SMSF it has a really important role in their retirement savings strategy. Preventing the use of modest borrowing for residential property will disadvantage many Australians and limit their ability to maintain a diversified portfolio, particularly in times of global and market uncertainty."
Jonathan Street, chief executive of Thinktank, said the ban undermined a core principle of sound retirement planning. "This measure makes it more difficult for SMSF trustees to maintain a balanced mix of assets across shares, fixed income, cash and property – just as other super funds do and will continue to be able to do. For many SMSF trustees, residential property is not speculative – it is central to how they manage risk and plan for the long-term."
Andrew Chepul, chief executive of ColCap Financial Group, questioned why a blanket approach was chosen over targeted regulation. "This is not unchecked activity – residential property is a legitimate part of a diversified retirement portfolio. Rather than applying targeted, calibrated settings, the Government has chosen a blanket approach. Removing residential SMSF borrowing does not eliminate demand for property investment within superannuation."
Industry calls for proportionate policy
Rather than an outright ban, the industry is calling on the government to adopt a more balanced alternative: permitting borrowing for a single residential property within an SMSF, while maintaining existing guardrails around trustee duties and structural safeguards.
The statement also calls on the government to urgently clarify the treatment of pipeline transactions, confirm that refinancing of existing residential LRBAs will remain available, and provide clear operational guidance to borrowers, lenders, brokers and advisers before the transition period expires.
"This policy was introduced without consultation, detailed modelling or evidence of systemic risk. It should be reconsidered before it materially reduces Australians' capacity to build sustainable retirement savings," Rehayem said.
