Big four losing home loan share — what borrowers can do

Big four home loan applications have fallen 12–20% since the May budget, opening the door for smaller lenders and Macquarie to compete harder for borrowers.

Home loan applications at the four biggest banks have fallen sharply since the May federal budget — and that's changing the balance of power at the mortgage counter.

According to Property Update, all four of Australia's largest banks reported drops of between 12% and 20% in new home loan applications in the weeks since May. The Reserve Bank, which recently confirmed its decision to keep the cash rate on hold at 4.35%, said demand for new home loans has "declined noticeably". For borrowers currently comparing loans or thinking about a refinance, that's a shift worth understanding — because when demand cools, lenders tend to compete harder.

Where the big four stand

The market share picture illustrates just how much things have moved. Commonwealth Bank still leads with 25.36% of the residential mortgage market, essentially unchanged from 2010 when it held 25.27%. Westpac holds 20.66% (down from 26.84%), NAB has 14.03% (down from 15.68%) and ANZ sits at 13.21% (down from 15.31%). The share that has shifted has largely gone to challengers, and Macquarie Bank has been the biggest beneficiary.

Macquarie's Australian mortgage portfolio has grown from $34.3 billion to $191.5 billion over eight years, making it the fifth-largest home loan lender with 7.33% of the market — up from just 0.19% in 2010. Commonwealth Bank's chief executive Matt Comyn described Macquarie as a "formidable competitor" earlier this year, and the numbers back him up. At least 31 smaller lenders have also started offering slightly lower variable rates to new customers since the start of June, Property Update reports.

If you haven't looked past the majors before, the cheapest home loan comparison is a useful starting point to see where non-bank and second-tier lenders are pricing right now.

Why competition is intensifying

Two things are driving the current push. First, borrowing demand has softened as households digest recent tax settings, cost-of-living pressure and interest rate expectations. Second, funding conditions have made it easier for smaller and non-bank lenders to price aggressively.

Property Update notes that more than 49 lenders currently offer variable home loan rates below 6%. Macquarie itself doesn't always sit at the very bottom of the table — its lowest advertised variable rate is 6.04% — but it combines competitive pricing with fast processing, more predictable credit decisions and a clear digital view for brokers. Around 95% of Macquarie's home loans come through brokers, compared with an industry average of roughly 81%, and that broker-led, online-only model gives it a cost advantage over rivals still maintaining extensive branch networks.

For borrowers, the practical implication is straightforward: the lender you know best may not be the one offering the sharpest deal today. A quick check of your current rate against a couple of competitors — using a refinance savings calculator — is a low-effort way to see whether it's worth going deeper.

What it means for refinancers

The most direct opportunity in this environment sits with existing borrowers. When application volumes soften, lenders lean harder on retention and win-backs, which can mean sharper discretionary pricing for customers who ask (or whose broker asks on their behalf).

A few things worth knowing before you approach the market:

- **The rate on your loan statement is a starting point, not a fixed number.** Discretionary pricing sits behind advertised rates at every major lender, and it tends to be more accessible when the lender in question is trying to hold or grow its book. - **Serviceability calculations differ across lenders.** Two households with identical incomes can be assessed for very different loan amounts depending on the lender's expense benchmarks and buffer assumptions. If you're borderline on serviceability, running the numbers through a borrowing power calculator before you talk to a bank helps set expectations. - **Refinance costs are real but usually recoverable.** Discharge fees, government registration and any new lender's setup costs typically add up to a few hundred dollars, and cashback offers (where available) can offset a chunk of that. The bigger question is the rate you land on and how long you keep it.

What it means for investors

Property Update also flags a specific pressure point for property investors. Under changes announced in the May federal budget, from July 2027 negative gearing for future residential investments and revised capital gains tax settings will favour new builds over existing homes. All four majors have reported bigger drops in investor lending applications than in owner-occupier applications, and Westpac has forecast its investor loans will halve next financial year — though Commonwealth Bank is expecting a less sharp decline.

For current investors, that flags a period of unusually competitive pricing on investment loans as lenders try to defend their existing books. If you have an investment loan sitting well above 6%, the case for a review is straightforward. Prospective investors weighing new-build versus existing stock may also want to think through the timing implications before locking in a purchase.

The bottom line

Australia's home loan market is going through one of its more competitive stretches in recent years, and the beneficiaries are borrowers who take the time to look. The RBA is holding the cash rate at 4.35% for now, cost-of-living pressures haven't gone away, and the tax changes announced in May are still working their way through investor decision-making. Against that backdrop, it's harder than ever to justify staying with a lender on a rate you haven't tested against the wider market in the past 12 months.

The advice for most borrowers is the same as it was six months ago, just louder: compare, ask for a review, and remember that the majors aren't the only game in town — Macquarie and a growing group of smaller lenders are actively competing for your business.