** Morgan Stanley says pickup in Australian housing loan growth since 2024 has been almost entirely driven by investment property loan growth, tax changes could slow mortgage growth to ~3-4% in 2027

** A shift toward owner‑occupier loans, which have lower spreads than investment property loans, would be a margin headwind for Australian banks - MS

** Adds, intensifying competition from weaker loan growth could widen front-book discounts for first time since 2022

** Says these pressures could result in FY27 earnings downgrades of ~5% for major banks

** Federal budget scrapped negative gearing for future purchases of existing investment properties

** Negative gearing, which allows investment losses to be offset against taxable income, will be limited to newly built homes to support new housing supply

** Financial sub-index .AXFJ has lost roughly 1.4% since May 12 budget; up 0.4% on Friday