Non-Bank Lenders Fight for Loans as Arrears Data Improves

BNK Banking Corporation's FY26 results show residential serious arrears falling sharply and fierce lender competition — useful signals for borrowers shopping for a better deal.

Non-bank lenders are competing harder than ever for Australian mortgage business, and new annual results from BNK Banking Corporation offer a useful window into what that competition looks like from the inside. The FY26 figures also contain an encouraging signal for borrowers worried about mortgage stress: serious arrears are falling, even as the cost of holding a loan has risen.

For anyone with an existing home loan — or considering a move away from a major bank — the BNK results are worth understanding.

Loan Book Growing, but Competition Is Relentless

BNK's loan portfolio grew to $954 million at 30 June 2026, up from $903 million a year earlier. Including senior secured investments, the group's total portfolio reached $994 million — representing 10% growth on the prior financial year, as The Adviser reported.

That growth didn't come from chasing volume at any cost. BNK CEO Steve Kinsella said the group has deliberately reshaped its portfolio toward higher-yielding lending while reducing exposure to lower-margin products. The most visible sign of that shift: commercial lending grew 82% over FY26, reaching $247 million and now accounting for 25% of BNK's total book, up from just 15% a year earlier.

At the same time, the full-documentation residential share of the book fell from 67% to 53%, while alt-documentation residential loans held steady at 18%.

Kinsella was candid about how competitive the environment has become. "Continued competition for loans across all categories is unlikely to ease with subdued overall market growth," he said. For borrowers, that kind of competitive pressure from lenders is generally good news — it creates incentive to sharpen rates, improve service, and offer more flexible products.

Arrears Are Falling — What the Numbers Show

Perhaps the most reassuring finding in BNK's results is the direction of arrears. Despite the RBA having raised the cash rate three times in 2026 to 4.35%, and cost-of-living pressures continuing to strain household budgets, serious arrears within BNK's residential portfolio improved significantly over the year.

Residential loans more than 90 days in arrears fell to 0.47% at 30 June 2026, down sharply from 1.20% a year earlier. Overall residential arrears sat at 0.93%. Meanwhile, 45.5% of residential borrowers in BNK's book were ahead on their repayments, and 56.6% were meeting their obligations on time. Principal-and-interest loans made up 81.8% of the residential book, with interest-only accounting for 18.2%.

Commercial borrowers showed similar improvement: 90-day-plus commercial arrears fell to 0.87% from 0.95% a year earlier, while overall commercial arrears were 1.55%.

This data points to something worth noting: many borrowers are holding their ground despite the rate environment, and some are even getting ahead. If you're finding repayments uncomfortable, reviewing your rate against what's available in the market today — rather than sitting on your existing lender's default variable rate — can make a meaningful difference. Compare current offers using our cheapest home loan rates tool, or run a scenario with our repayment calculator.

Investors Should Note Policy-Driven Caution

Not every signal in the non-bank results is straightforwardly positive for borrowers. Kinsella flagged a specific concern about the investor segment, noting that recent government policy changes are tempering appetite for property investment.

"Budget changes impacting CGT on investments, negative gearing and SMSF borrowing are contributing to cautious investor sentiment," Kinsella said. Within BNK's residential portfolio, investors made up 37.4% of balances at 30 June 2026, with owner-occupiers accounting for the remaining 62.6% — a split that was little changed from the prior year.

For property investors currently holding loans, the changed policy landscape is worth factoring into any review of your financing structure. If you're carrying higher-rate interest-only loans that were set up under different tax assumptions, it may be worth running the numbers on whether restructuring makes sense. Browse investor home loans to see what the current market offers, or use our refinance savings calculator to estimate what switching could save you over the course of your loan.

For would-be investors sitting on the fence, Kinsella's observation reflects what many brokers are hearing from clients: the intent to invest is there, but buyers are approaching decisions more carefully than they were two or three years ago — which, given the current rate and policy environment, is a reasonable response.

What Non-Bank Competition Means for Your Next Loan Decision

BNK's FY26 results also flagged significant investment in technology infrastructure, described by Kinsella as a "transformational technology investment" intended to improve broker partner and customer experience to "drive further volume growth." That kind of investment is a signal that non-bank lenders are positioning for a sustained push in the broker channel.

For borrowers, the practical takeaway from non-bank lenders competing this actively is that the market beyond the major banks deserves a genuine look. Non-bank lenders often have more flexible credit assessment criteria, can move faster on approvals, and in a competitive environment may price their products sharply to win business.

BNK's results recorded a statutory net loss after tax of $3.7 million for FY26, driven largely by a $3.5 million goodwill impairment — not a sign of operational distress, but a reminder that smaller lenders are investing heavily to compete. For borrowers, that competition translates into choice.

For more detail on BNK's results, see the original report at The Adviser.

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