As the dust settles, RedZed's Nathan Taddeo unpacks the SMSF residential ban, the refinancing surge and where broker demand is shifting next
Australia's self-managed superannuation fund (SMSF) lending market has been rewritten in the space of mere months.
Since new residential limited recourse borrowing arrangements (LRBAs) were outlawed from 10 August 2026, brokers who built a niche around SMSF property loans have had to rethink their offering almost overnight.
Nathan Taddeo, general manager of sales and strategic partnerships at self-employed lending specialist RedZed, says the change – while narrower than some feared – is already reshaping how brokers, borrowers and lenders approach the segment.
What's changed?
The ban did not appear in Treasurer Jim Chalmers' original 12 May Budget. It was added weeks later as the price of Senate passage, after Labor's decision to ban SMSF property lending was struck as part of a deal with the Greens to get the reforms through the Senate.
The legislation received Royal Assent on 26 June, triggering a 45-day transition window that closed on 10 August. From that date, an LRBA can only be used to acquire real property if it meets the definition of business real property under the Superannuation Industry (Supervision) Act 1993 – meaning new residential purchases inside an SMSF are no longer permitted, while existing arrangements are grandfathered and can still be refinanced, according to the Australian Taxation Office (ATO).
The scale of the change has been contested from the outset. Chalmers characterised SMSF lending as under 1% of residential borrowing, but the surprise and anger from SMSF specialists that followed the announcement showed the market comprised roughly $25 billion in borrowings at the time.
That figure has since been revised upward: new data on the true size of the SMSF lending market put total LRBA-supported assets at around $75 billion, backed by roughly $28.9 billion in debt, prompting the Australian Finance Industry Association (AFIA) to argue the government's benchmark figures were out of date.
Taddeo agrees the headline numbers understate the impact on RedZed's core customer base of self-employed Australians. "For many self-employed Australians, residential property has been an accessible way to invest through their SMSF," he told MPA. "The impact of the ban could be far more significant for self-employed borrowers than the headline figures might suggest."
Refinancing: the new battleground
With new residential lending switched off, attention has turned almost entirely to the existing book.
Taddeo says RedZed saw a rush of activity in the run-up to the 10 August deadline, echoing MPA's coverage of the frantic 45-day dash brokers described as clients scrambled to exchange contracts before the cut-off.
"Following the announcement, we saw a noticeable increase in enquiries and application activity as borrowers looked to understand what the changes meant for them. Since then, we've seen enquiries shift away from new purchases and more towards refinancing."
That shift is playing out across the lending market. La Trobe Financial recently launched a streamlined assessment product for existing SMSF borrowers, part of a wider trend of lenders simplifying SMSF refinancing assessments since the ban took effect.
RedZed has taken a similar approach with its SMSF EasyRefi process, which assesses eligible dollar-for-dollar refinances on repayment history rather than a full serviceability review, reuses existing legal advice where a fund's structure is unchanged, and waives RedZed's standard legal fees – typically around $1,500.
"SMSF refinancing has traditionally been viewed as complex, paperwork-heavy and simply too difficult for many brokers and borrowers to pursue," Taddeo said. "Many brokers don't regularly revisit their SMSF back book because refinancing is often seen as being in the 'too hard basket', even when there may be significant savings available for their clients. We saw an opportunity to change that."
Those savings can be significant, according to Taddeo. "We've seen examples where borrowers could reduce their interest rate by around three percentage points. On a $600,000 loan, that could translate to approximately $18,000 in annual interest savings that stays within the super fund."
The pivot toward commercial
Taddeo expects brokers who specialised in residential SMSF lending to broaden into commercial property, which remains untouched by the reform.
"There's now a greater need to become comfortable discussing commercial property opportunities with their clients," he said, adding that commercial SMSF lending "comes with different structures, considerations and education requirements".
For brokers used to a straightforward residential product, that's a genuine shift in the conversation they'll need to have with clients – and a segment RedZed expects to grow in importance as the residential pathway closes off.
On the twelve-month horizon specifically, commercial property is expected to step into the space residential lending has vacated. "With new residential SMSF lending no longer available, commercial property is likely to become a more important avenue for those self-employed Australians looking to invest through their super and build for retirement."
A shrinking market
Taddeo is careful not to overstate how far the reform's effects will travel.
"It's still too early to fully understand the broader implications of this change for property markets, investor behaviour and the economy more broadly. "Markets tend to adapt over time, and we'll need to see how borrowers, brokers and lenders respond once the initial adjustment period has passed."
Where he is prepared to make a call is on refinance volumes. "I expect refinance activity to remain strong as SMSF borrowers take the opportunity to review whether they're on the right rate and loan structure.
"Announcements like this naturally prompt people to reassess their current arrangements and explore whether there are better options available."
Taddeo also expects the pool of active SMSF lenders to keep shrinking. "We're also seeing some lenders reduce their presence in, or exit, the SMSF market altogether," he noted. "As that happens, I think more borrowers will look to specialist lenders like RedZed that remain committed to supporting SMSF customers and understand the unique needs of this segment."
That consolidation is central to how Taddeo frames RedZed's own strategy. "While it changes the landscape for new residential SMSF lending, it also creates a strong opportunity to support existing SMSF borrowers who may benefit from refinancing and reviewing their current loan arrangements."
He points to timing as much as product design: EasyRefi "was already part of our product roadmap" before the ban was announced, but once the changes were confirmed, RedZed judged that many SMSF borrowers would be reviewing their existing arrangements and looking for ways to improve their position, making it "even more important to bring EasyRefi to market sooner".
For brokers, Taddeo's message is one of adaptation rather than retreat, built around the existing client base rather than new acquisition. Brokers who continue to broaden their skills and expertise across different lending segments “will be best placed to support their clients and identify new opportunities as the market evolves”.
