Oct 19, 2026 · 44 min
Property buyers face tougher maths as rates reshape strategy
Ask An Adviser: Where property is heading, debt recycling and the future of rentvesting with Patt Noll
With borrowing capacity under pressure, the episode connects Australian property decisions to cash flow, risk tolerance and long-term financial goals.
- 1Buyers should weigh resilience and time horizon rather than trying to predict the property market’s bottom.
- 2Debt recycling can support investing, but loan-purpose separation and tax advice are essential to avoid costly mistakes.
- 3Fixed rates, equity releases and investment loans require flexibility and repayment capacity, not just attractive headline terms.
Don't miss
Patt Noll responds to an overstretched first-home borrower by prioritising an emergency fund and expense review before relying on hardship or interest-only arrangements.
The brief
Patt Noll of Runestone Finance argues that buyers should focus less on calling the market bottom and more on whether repayments fit their goals and financial resilience.
Higher rates and lender serviceability buffers have reduced borrowing capacity, making heavily negatively geared strategies less attractive and pushing some investors toward stronger cash flow, principal residences or shares.
The property choice is not simply established versus off-the-plan: valuation certainty, construction risk, tax treatment and the prospect of identical new homes competing for tenants all matter.
Noll breaks down offsets, redraws, loan splits, equity releases and debt recycling, while stressing that clear loan-purpose separation and tax advice are central to responsible investing.
A case study of an overstretched first-home borrower turns the theory practical: build an emergency fund, review expenses and treat hardship or interest-only options as limited measures.
What was said on this episode
38 statements · 18 positive · 15 negative · 2 mixed · 3 neutral
Buy property only when prepared to hold it beyond a few years.
“You shouldn't be buying property to sell over a few year period.”
Listen at 0:04
Bank approval should not determine whether borrowers take a loan.
“whether a bank will give you a loan should be of no consequence to whether or not you should actually take it out.”
Listen at 0:31
Property buyers should plan for an eight-to-ten-plus-year holding period.
“you should really be looking at sort of an eight, 10 plus year horizon when you're buying a property.”
Listen at 2:38
A ten-percent property discount may create a good buying opportunity for long-term holders.
“if you can get a discount of 10% from six months ago, that could be a really good time to actually get in”
Listen at 2:43
Australian property markets will experience further pain.
“I think there is more pain to come.”
Listen at 3:16
Property-market weakness may continue for another six to twelve months.
“maybe another sort of six to 12 months of pain.”
Listen at 3:54
Affordable property purchases aligned with a plan should proceed despite market uncertainty.
“if you can afford it and it's part of your plan that you've, you know, worked out with. ideally a financial planner or somebody who's in that space, well, then you should just go ahead and do it”
Listen at 5:26
Borrowing capacity is roughly 35–40% below its level when rates were two percent.
“It's around sort of 35% to 40% less than it was, but rates were 2%.”
Listen at 6:01
Heavily negatively geared property accumulation is no longer a viable default strategy.
“gone are the days of just purchasing a $750,000, $800,000 house that's severely negatively geared and, you know, just... waiting to release equity and go again and again and again.”
Listen at 8:05
A $1.425 million loan requires roughly $220,000 annual income for a solo borrower.
“you would need like $220,000 a year for the bank to give you the loan.”
Listen at 9:36
Borrowing at the maximum approved amount can leave high-income buyers financially constrained.
“it's such a bad idea though for the most part because like all you you know you're broke”
Listen at 10:03
Buy an affordable principal residence in the desired location when feasible.
“if you can buy where you want to live and where you want to set your family up, and it's not going to have a really prohibitive mortgage repayment, do that.”
Listen at 12:45
Home equity can support debt recycling and subsequent investment.
“you can then start to debt recycle and invest from there. You know, that's a really powerful strategy.”
Listen at 13:02
Investors’ borrowing capacities fell about 30 percent after May 12.
“most investors' borrowing capacities just since May 12th have reduced by sort of 30% as well.”
Listen at 13:56
Buying heavily negatively geared properties is no longer a strategy he would use.
“I think buying really negatively geared properties, that strategy is. dead. Yeah. In my book. I mean, people are still going to do it. Yeah. I wouldn't do it.”
Listen at 14:41
Investors are increasingly withdrawing property equity to buy shares.
“predominantly we're seeing people pull money out to go and buy shares.”
Listen at 15:12
Established property is generally the safest property purchase format.
“if you buy an established property that you can touch and feel and do a valuation on that day, that's kind of the safest way to buy property”
Listen at 15:58
Off-the-plan buyers may fail to qualify for financing at settlement.
“you might not be able to get the loan.”
Listen at 17:05
Off-the-plan buyers can face a funding shortfall if valuations fall before settlement.
“if in two years time, the bank goes and does a vow and they're like, sorry, but it's 900K now, you're left with a shortfall.”
Listen at 17:13
Large developments can introduce hundreds of identical properties simultaneously.
“there's like, you know, millions of, not millions, but hundreds of the same exact property coming online at the same time.”
Listen at 17:56
With redraw, depositing and withdrawing funds can repurpose the debt for tax purposes.
“if it's a redraw account, if I put the $100,000 into a $500,000 mortgage, and then I pull it back out, I'm actually repurposing that debt.”
Listen at 20:01
A properly separated loan split can make investment debt clearly tax-deductible.
“now that split is very clearly earmarked for tax deduction.”
Listen at 20:50
Banks generally lend up to 80 percent against available home equity.
“A bank, for the most part, will give you up to an 80% loan on your equity.”
Listen at 21:33
Eligible borrowers should access available equity early because arranging it costs nothing.
“if you've got it there and you can service it, it costs you nothing to do that process, you know.”
Listen at 22:38
Borrowers should prioritize non-deductible debt over tax-deductible debt repayment.
“don't pay off tax deductible debt when you've got deductible debt.”
Listen at 24:32
Automated bank valuations can differ by about 30 percent for the same property.
“sometimes there's like 30% discrepancy between the values.”
Listen at 26:55
Failing to debt recycle is the most common debt-recycling mistake.
“the most common mistake would be not doing it”
Listen at 29:03
Debt recycling requires precise separation and documentation of fund movements.
“you've got to be really clear with how you move the money.”
Listen at 30:36
Borrowing against property is generally the cheapest way to obtain investment funds.
“if you have property as a security, it is just the cheapest way to get money.”
Listen at 32:39
Property-secured investment borrowing can offer roughly 6.5 percent interest-only rates and 30-year terms.
“cheaper rate, because you just get your standard sort of 6.5% interest only rate at the moment versus whatever we said it was, eight plus, 30-year term.”
Listen at 33:55
Building an emergency fund is the first step for financially stretched homeowners.
“the best way to do that is firstly, an emergency fund.”
Listen at 36:09
Homeowners can use equity release to fund large maintenance expenses.
“you can get an equity release to cover some of that”
Listen at 36:48
Borrowers should proactively seek lower mortgage interest rates.
“you should be really proactively looking at your interest rate”
Listen at 37:11
Extending a mortgage back to thirty years can relieve short-term cash-flow pressure.
“re-amortizing your loan back over a 30-year term”
Listen at 37:28
Interest-only loans are more suitable for investment properties than owner-occupied homes.
“Interest only. Great for investment products, not so great for unoccupied.”
Listen at 38:23
Cassandra’s mortgage appears manageable relative to her income.
“mortgage wise, it seems like it's sort of manageable.”
Listen at 41:14
Fixed-rate mortgages are generally unattractive to him.
“I kind of hate fixed rates.”
Listen at 41:43
Borrowers unable to tolerate rate increases should fix their mortgage rate.
“If you're maybe at sort of the top end of your affordability and you're thinking, God, I really can't handle another rate increase. Then, yeah, you should 100% fix.”
Listen at 42:23
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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