Non-Bank Lenders Hit 10.7% of New Mortgages — Is One Right for You?

ABS data shows non-bank lenders grew 65% in a year while the big banks barely moved — here's what that shift means for your borrowing capacity.

Australia's mortgage market is undergoing a structural shift. While the major banks continue to account for the bulk of home lending, a growing number of Australians are turning to non-bank lenders — and the numbers behind that trend are larger than most borrowers appreciate.

New analysis published by Money.com.au, drawing on the latest Australian Bureau of Statistics Lending Indicators, shows that non-bank lenders issued $10.49 billion in new home loans in the June 2026 quarter. That compares with $6.35 billion in the same quarter a year earlier — a year-on-year increase of 65.2%.

Australian Broker reports that over the same period, lending by the major banks and other APRA-regulated institutions — including smaller banks, credit unions, and building societies — grew just 2.6%, from $85.41 billion to $87.61 billion. Non-bank lenders now account for 10.7% of new home lending by value, more than double the 4.8% share they held in September 2019, with growth accelerating since mid-2023.

What makes the figure more striking is the overall market context. Total new housing lending fell 5.2% in the June 2026 quarter compared with the March quarter, while non-bank lending rose 3.2% over the same period. Non-banks are not simply riding a rising market — they are growing their share as the broader market contracts.

Why the Serviceability Buffer Is Driving Borrowers to Non-Banks

The core driver of this shift is regulatory. APRA-regulated banks are required to apply a 3% serviceability buffer when assessing whether a borrower can afford a mortgage. That buffer — added on top of the loan's interest rate — reduces the maximum a borrower can qualify for, and has become a meaningful constraint in an environment of already-elevated rates.

Non-bank lenders, which sit outside APRA's prudential framework, are not subject to that same mandatory buffer. Nick Burgess, mortgage expert at Money.com.au, said the gap is increasingly significant. "Non-bank lenders sit outside APRA's prudential rules, including the 3% serviceability buffer banks have to apply. Most still apply a buffer of their own, but it's often lower, which can mean more borrowing capacity than you'd get from a traditional bank."

Burgess linked the trend directly to 2026's tighter conditions. "This year's rate rises, reduced borrowing power, and tighter lending conditions for investors following the federal budget have squeezed how much people can borrow. These factors are pushing more borrowers to look beyond traditional banks."

Beyond the serviceability buffer, non-bank lenders can also be a better fit for borrowers whose financial profile does not sit neatly within standard bank credit criteria — including those who are self-employed, have irregular income streams, or have a credit history that falls outside major bank policies. And for straightforward borrowers, some non-bank lenders remain genuinely rate-competitive as well.

Use our borrowing power calculator to estimate your current borrowing capacity, and consider whether a non-bank lender might open up additional room. If you are an investor, our investor home loan hub covers what is currently available for investment lending specifically.

What to Weigh Up Before Going Non-Bank

Non-bank lenders can open doors that major banks have closed, but there are real trade-offs to understand before you apply.

**Comparison rates matter more here.** Some non-bank lenders charge higher rates to compensate for the flexibility they offer. Always compare the comparison rate — not just the headline interest rate — to get an accurate picture of your total borrowing cost over the life of the loan. Our cheapest home loan guide lets you benchmark what is currently available across the market.

**APRA oversight does not apply.** Non-bank lenders are not subject to the same prudential regulation as banks. This does not make them unsafe — many are reputable, well-capitalised lenders with long track records — but it does mean doing your due diligence on the lender's background and funding arrangements matters more than it does with a bank.

**Lower buffers cut both ways.** Even though non-bank lenders are not bound by the 3% APRA buffer, most apply their own. As Burgess noted, that buffer is often lower than 3%. That may mean more borrowing capacity today, but it also means you should be confident you can comfortably service the loan at a rate higher than the starting rate — not just at the introductory figure.

If you are considering switching from your existing lender, it is worth running the numbers with our refinance savings calculator before making any decision.

Whether non-banks' growing footprint represents a temporary response to current market conditions or a more permanent shift in where Australians get their home loans remains to be seen. But for borrowers who have hit a wall with the major banks on borrowing capacity — or whose financial profile simply does not fit standard bank criteria — non-bank lenders have become a serious option worth exploring with a broker who can access both sides of the market.