Brokers must accept ‘a new world’ has arrived: FBAA

Leo Gagic, new CEO of the Finance Brokers Association of Australia (FBAA), has said that brokers and borrowers will need to adjust to the new lending environment, in which limited recourse borrowing arrangements (LRBAs) for residential property through self-managed super funds will be banned.

As of 10 August 2026, lenders will be unable to offer new LRBA loans for residential property, as a result of legislative changes made as part of the federal government’s housing tax reforms.

With the transition period now underway, brokers have reported a surge in last-minute inquiries from both existing SMSF trustees and prospective clients, as have many non-bank lenders.

Speaking following widespread industry outcry relating to the incoming ban, the FBAA CEO said that “brokers must accept that a new world has arrived in regard to SMSF residential lending”.

“Along with borrowers we must adjust, as this legislation, along with changes to negative gearing and CGT, have now been rushed through Parliament with no industry consultation,” he said.

He said there was “already confusion and distress” from borrowers regarding the short time frame of the incoming ban.

“There is a strong likelihood that both home owners and renters will incur losses and higher prices as a result of legislation that won’t help solve the housing crisis in any meaningful way,” Gagic said.

“Specialist lenders in this field are doing what they can to support brokers and borrowers through these changes.

“While all new residential lending and limited recourse borrowing arrangements are effectively dead from 10 August, opportunities for SMFS commercial lending remain as well as residential refinancing opportunities where appropriate through the grandfathering provisions enacted.”

The FBAA CEO therefore said that finance and mortgage brokers “will be at the forefront of helping borrowers through these changes”.

“My advice to brokers is to be proactive and contact affected clients,” he said.

“Impacted clients will rely on the trusted assistance and guidance offered by brokers more than ever before.”

The FBAA comments echo those made by other industry associations last month, including the Mortgage & Finance Association of Australia (MFAA), the Commercial & Asset Finance Brokers Association of Australia (CAFBA), and the Australian Finance Industry Association (AFIA), which have issued a joint statement blasting the ban.

Lenders have already reported an increase in applications since the ban was announced, with many urging brokers to rapidly triage residential SMSF files that are already in flight.

AMP – which only re-entered the SMSF lending arena this year – initially retreated from the SMSF lending space following the changes but “reviewed its position”, saying it would reopen SMSF loans for the time being.

Similarly, Pepper Money’s head of broker sales, Siobhan Williams, said the non-bank had experienced a surge in demand.

“We certainly have seen a surge of inquiry since it was announced,” she said and spoke on The Adviser’s Navigating commercial finance webcast.

Looking beyond the transition period, Williams said: “What will happen post the changes is we will still be open for business for refinances. So refinances will still absolutely be an opportunity for cash flow improvement within the SMSF.

“As for whether or not we’ll see a spike in commercial property acquisition through SMSF, yields are still pretty strong and there are still a lot of tax benefits to purchase for owner occupation as a business.

“So we may see some self-employed who already have SMSFs that are switching from resi over to commercial as a strategy, if that’s the advice that they’re given.”

[Related: SMSF changes trigger last-minute borrower surge]

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