subscribe to our newsletter

Non-bank share on the rise as banks lift rates

An increasing number of Australians are obtaining home loans from non-bank lenders, bypassing higher interest rates offered by traditional lenders, new ABS data has revealed.

According to the latest Housing Finance data from the Australian Bureau of Statistics (ABS), non-bank market share rose to 7.85 per cent in May 2018, up by 83 basis points from 7.02 per cent in May 2017.

The number of loans settled by non-bank lenders, in seasonally adjusted terms, increased for the third consecutive month to 4,779 in May, with a total value of $1.66 billion, up from 4,573 loans settled in April, with a total value of $1.60 billion — a year-on-year increase from 4,233 ($14.5 billion) in May 2017.

Banks settled 48,258 home loans with a total value of $19.5 billion in May, up from 47,863 with a total value of $19.4 billion in April. However, the number and value of loans settled by banks has dropped year-on-year, from 50,189 ($19.2 billion) in May 2017.

RateCity spokesperson Sally Tindall said: “Australians are starting to look for finance beyond the banks in steadily increasing numbers.


“Non-bank lenders are known for their low rates, which can make a difference, particularly in a market where every cent counts.”

Ms Tindall added: “This move, while small, will not be lost on the big banks. They don’t like giving up market ground for anyone.”

The ABS data also revealed that the portion of borrowers that applied a fixed rate to their home loan dropped to the lowest level since September 2016 (11.2 per cent), from 13.2 per cent in April to 12.1 per cent in May.

Money editor at finder.com.au Bessie Hassan claimed that borrowers are reluctant to apply a fixed rate to their mortgage amid the record low cash rate of 1.5 per cent.  

“The fact that the cash rate remains at a historical low with no change in almost two years indicates that there’s less urgency among Aussie home owners to lock in a rate. They’ve been riding this wave for a while now; however, the tide could be turning,” Ms Hassan said.


Pointing to a recent survey of leading economists conducted by finder.com.au, Ms Hassan noted that with the next rate move from the Reserve Bank expected to be up, borrowers should consider refinancing to a fixed rate.

“A rate rise is a matter of ‘when’ and not ‘if’ — with 84 per cent of leading economists predicting the next cash rate move to be in a positive direction,” the money editor said.

“With this in mind, now might be a good time to consider locking in your rate, especially given the number of out-of-cycle rate changes we’ve seen in recent weeks.”

Over the past few weeks, several non-major lenders — including Macquarie Bank, AMP, ING, Bank of Queensland, Heritage Bank and Auswide Bank — have announced increases to their variable rate home loan offerings, with most attributing their decision to a rise in wholesale funding costs.

Conversely, most of the aforementioned lenders, including Macquarie and AMP, have reduced rates on their fixed rate loans.

“With more than half of Australian mortgage holders already admitting they couldn’t handle a $100 rise in monthly repayments, it’s evident many Aussies are already faced with mortgage stress,” Ms Hassan said.

“Refinancing could save you thousands. Additionally, fixing could give you the added peace of mind you’ll be able to keep up with your mortgage repayments, regardless of any future rate changes.”

The ABS data also found that the proportion of loans issued to first home buyers remained stable at 17.6 per cent, with an average loan size of $344,600.

[Related: Non-bank mortgages growing twice as fast as majors]

Non-bank share on the rise as banks lift rates
lift rates, share on the rise, arrow up

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

A report has found that property investor enquiry spiked and first home buyer enquiry faded on the realestate.com.au website compared with ...

The government has bumped up funding for the regulation of super funds, ahead of its incoming Your Future, Your Super reforms. ...

New home sales tumbled in April as the HomeBuilder scheme concluded but a significant volume of building work is set to commence in 2021, ac...

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.