As uncertainty remains with the direction of leverage inside superannuation, I was interested to read a recent decision by the National Australia Bank to ‘quietly’ exit the SMSF property loan space. In recent times the Assistant Treasurer, Josh Frydenberg has indicated that limited recourse borrowing arrangements may survive, but in a revised form, with a concern being around the use of personal guarantees (previously indicated in a speech at the 2015 SMSF Association conference). I suspect there will be more that just this on the table when it comes to reform of LRBA arrangements.
When we look at the major banks, ANZ has no exposure to SMSF property loans (never entered the market) and Westpac supported the banning of leverage in superannuation in their FSI submission (even though they are the biggest provider of SMSF property loans). Whilst there appears to be rallying support for SMSF borrowing to survive, one must wonder whether it may ultimately be the banks that put the real nail in the coffin to limited recourse borrowing arrangements as the loan facilities disappear for SMSF trustees.