There are four trends in banking that Accountants and Advisors need to be aware of this year. These four trends are essential for advisors to know when supporting clients with debt and cash management options.
We provide our perspective on each below.
1. Further Restrictions on Trust & Company Borrowers
Several Credit Providers have amended their residential lending policy, removing eligibility for new loans where the borrowing is through a trust or company structure. Others will limit lending to existing customers only or reduce available loan-to-value ratios.
Why this matters: This change may impact your advice to customers on property investment, knowing that the options for credit are more limited for property mortgages in non-personal structures.
Reason: Amongst other funding restraints, this restriction is partially driven to curtail those looking to sidestep regulations applying to consumer credit.
Tip: Where clients are using residential property for predominantly business borrowings, existing arrangements will continue to apply.
2. Interest Rate Trends & 2026 Outlook
Many are aware that interest rates in Australia may remain elevated in 2026, as inflation risks persist and monetary policy settings stay tighter for longer. We are already seeing this flow through in wholesale and bond markets, which is manifesting in higher delivery rates.
Why this matters: Advisors should allow for higher‑interest rate scenarios when stress‑testing client serviceability.
Reason: Credit providers will be doing the same when assessing applications.
More: MCP’s Rate Watch newsletter offers a concise summary of current rate settings and market expectations that can be used to inform internal assumptions and client communications.
3. Income Declarations - The Accountant's Role
Accountants who are asked to provide income declarations or letters to support client credit applications should review and prepare them with care. Figures should be anchored to verifiable sources with clear statements about the basis of preparation, assumptions and any limitations.
Why this matters: In our view, practitioners should avoid implying assurance over future income unless appropriate under accounting standards. Where appropriate, resist pressure to inflate income to meet serviceability requirements. Continue to define the scope and disclaimers and retain workpapers supporting any declared figures.
Reason: There are many circumstances where alternative forms of verification are appropriate, and there are means to do so in a responsible way. At the outset, consider whether the proposal makes sense. What is the quantum and reliability of income, and is there a nexus to past performance? This approach helps manage risk while supporting the broader responsible lending framework.
More: Please reach out for support in these areas. There are increasingly reputable options available that are both compliant and appropriately priced for risk.
4. Prudential DTI Caps Commence on 1 February
The Australian Prudential Regulation Authority (APRA) has a new macro‑prudential cap, debt‑to‑income (DTI), which will apply to all Approved Deposit Institutions (ADIs) such as banks and credit unions. ADI’s are now required to limit new residential mortgage loans with a DTI of six or more to 20% of new lending.
Why this matters: ADI’s are required to review existing loans against this new measure. In addition, the banks’ ability to take a more “risk-based approach” on higher net-worth customers may be impacted where DTI is breached.
Reason: Higher DTI borrowers may see increased scrutiny on income evidence and be impacted by DTI quota limits even where traditional loan servicing is evident. This policy commences 1 February 2026.
More: Learn more about how DTI affects lending https://blog.mcpfinancial.com.au/debt-income-ratios
"The more things change, the more they stay the same". The context of this idiom is that while technology, innovation and AI are changing many things, there are financial fundamentals that remain unchanged.
Good credit habits remain instilled around the "C's of Credit", and following these markers generally keeps borrowers out of trouble in debt matters.
Presenting your client’s scenario in an optimal way with potential credit providers will be increasingly important. Understanding the risks and the mitigants will support a way forward.
For accountants & advisors wanting to explore how these policy changes and rate dynamics affect their clients in practice, the MCP team is available to workshop scenarios or otherwise support you during 2026.
To arrange a briefing for your firm, contact MCP Financial Services on P: 1300 510 816 www.mcpfinancial.com.au or contact your Finance Partner.