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

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.