Big banks grab the lion's share of refinancing in NSW

Home loan refinancing activity is on the rise in NSW, and according to a new report from the NSW Land Registry Services, it’s the big banks that are benefiting the most.

The LRS found that more customers were moving away from the major banks than were coming on board in the months leading up to COVID-19, but after the pandemic struck that trend was reversed.

Since then, the big four have been the only segment to see a substantial increase in share of refinances. Meanwhile, refinances to non-ADI lenders, other domestic banks, foreign ADIs and customer owned banks have decreased.

In August alone, the number of customers flocking to the big banks from other lenders accounted for 70% of refinances in NSW, an increase of 15% on the same month last year.

In total, the major banks won over 5,195 refinancers over the month, outperforming other domestic banks (+1,311), customer owned banks (+458), foreign ADIs (+412), and non-ADI lenders (+346).

The major banks continue to dominate the home loan space, making up 67% of mortgages recorded on titles in NSW. This represents an increase in volume of 19% from the previous year. 

Major banks versus smaller lenders

According to the LRS report, refinancing activity remained stable throughout 2019 and early 2020, but has since increased as borrowers reevaluate their finances in light of the current economic crisis.

The current interest rate environment has done much to fuel this. Back in March, the big banks scored plenty of attention by cutting fixed rates to all-time lows, and since then the majority of lenders have followed suit.

But while many challenger lenders have surpassed their larger counterparts in the rates game, the big banks still command the lion’s share of new mortgage signups and refinances. 

According to Mozo’s banking expert Peter Marshall, this most likely comes down to a combination of security and visibility.

“People will be looking for the reassurance of brands they recognise given all the uncertainty and change that has been happening over the last six months,” he said.

“Even though the big four have reduced some rates, there are still plenty of options available with rates that are meaningfully lower, and some of those don't require borrowers to lock into a fixed term, which is where the big banks are most competitive.”

At the end of the day, whether you opt for a major bank or a competitor will come down to what you want out of your home loan. If convenience is your main concern, you might prefer to stick with one of the big four.

But if you’re after a more competitive interest rate, it might be worth exploring other options. Smaller lenders tend to save on overhead and operating costs, which they can then pass on to customers in the form of lower rates. 

To see for yourself, head over to our home loan comparison page, where you’ll be able to filter your search by rate and type. And for more information on lending trends, browse our home loan statistics page.

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Last updated 14 July 2024 Important disclosures and comparison rate warning*
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  • Low Rate Home Loan

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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