Here’s why home loan borrowers could be leaving Big Banks like CBA

Young borrower excited to leave CBA for a smaller home loan lender

Australia’s biggest home loan lenders just got a little bit smaller. 

New data from the Australian Prudential Regulation Authority (APRA) showed last month that CBA lost some of its home loan market share in the last half of 2023. It now accounts for 25.3% of all mortgages in Australia

While CBA regained some of its ground in December, it’s slower than other home loan lenders, particularly Macquarie Bank. CBA is at its lowest share of the mortgage market since July 2019. 

Westpac (21.4%) and ANZ (13.5%) seem to have stabilised, while NAB (14.6%) joined CommBank on the downward slide.

So why could home loan borrowers be leaving the Big Four?

The home loan rate war is over

When the Reserve Bank of Australia first started lifting home loan interest rates in May 2022, mortgage lenders scrambled to poach home buyers eager for a better deal. 

Now that official interest rates have hit a decade high at 4.35% – and will likely stay that way for a while – home loan lenders aren’t so keen to offer lower rates than the competition. The home loan rate war is over. 

However, mortgage stress is still mounting on Australian borrowers. With a huge need to save interest on mortgage repayments, it makes sense why Aussies would turn away from the Big Four Banks. 

After all, if we do a home loan rate check using the Mozo home loan database, the Big Four offer noticeably higher average interest rates than smaller lenders. 

  • Average variable rate: 6.85%
  • Average Big Four variable rate: 7.48%

Averages are for an owner-occupied home loan making principal & interest payments with a loan-to-value ratio (LVR) under 80%). 

No refinancing incentives

In May 2023, CBA became the first Big Bank to withdraw its cashback for refinancing. At the time, 25 lenders in the Mozo home loan database had offers – by August 2023, it was just 13. Today, in January 2024, it’s 7. 

Mozo home loans expert Peter Marshall reminds us that banks are businesses. They won’t offer deals out of the generosity of their hearts, they offer home loan perks to get new customers or steal customers from the competition. 

And with plenty of home buyers keen to enter the market – no matter how steep home loan costs become – there’s not much incentive to compete for refinancers anymore.

That being said, some lenders still offer cashback, including Big Bank ANZ. It’s just about looking further afield. Speaking of which…

Home loan borrowers want something different

Because the Big Four Banks own so much of the home loan market, usually what they say becomes standard. CBA hikes interest rates? So do other mortgage lenders. NAB starts pulling refinance offers? So do other mortgage lenders.

This dominance is a double-edged sword, however. Home loan borrowers must look at smaller lenders, especially online lenders like Unloan (ironically, backed by CBA) or Up (backed by Bendigo), to get something different. 

Something different can look like:

  • Interest rate discounts, like from Unloan, or NICU’s capped rate home loan.
  • Cashback for refinancers.
  • Borrowing and budgeting features in mobile apps.

You can compare some of the best online mortgage lenders in our hub, including picks from Mozo’s expert judges. 

Compare home loans in the table below.

Compare home loans - last updated 24 February 2024

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure
  • Mozo Expert Choice Badge
    Home Fixed Rate

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    5.80% p.a.
    fixed 3 years
    6.05% p.a.

    Enjoy the security of a competitive fixed interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply). Mozo Experts Choice award winner.

    Compare
    Details
  • Mozo Expert Choice Badge
    Home Variable Rate

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    6.15% p.a. variable
    6.15% p.a.

    Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.

    Compare
    Details
  • Straight Up

    Obliterate, Owner Occupier, Principal & Interest, <50% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    6.24% p.a. variable
    6.24% p.a.

    Get a low variable rate depending on your deposit with Athena’s Straight Up Variable Home Loan. AcceleRATES feature helps you to reduce your home loan even faster (T&Cs apply). Zero fees to pay. Free redraw facility. Handy mobile app to manage your home loan.

    Compare
    Details

* 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.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.