24/04/2025
Australia’s major banks are continuing to cede ground in the mortgage market, with the latest figures from Australian Finance Group (AFG) showing a continued rise in the presence of non-major lenders.
During the third quarter of the 2025 financial year, the combined market share of the big four banks and their associated brands slipped below the 60% mark, falling to 59.9%. This marks the lowest third-quarter figure recorded by AFG brokers in the past three years.
In contrast, non-major banks and non-bank lenders saw their share rise to 40.1%, highlighting a steady shift in broker preferences and borrower demand towards more diverse lending options.
Non-Majors Gaining Momentum
The change in market dynamics is being driven in part by increased usage of AFG’s own lending offerings. Lodgements to AFG Securities, the group’s proprietary loan brand, rose by 20% compared to the same period last year. More than half of all loans directed to AFG Home Loans during the quarter were handled through AFG Securities, which also includes a range of white-label loan products that experienced a 5% year-on-year increase in volume.
The securitised lending arm of AFG has seen rapid growth, with its loan book expanding 23% in the first half of FY25 to reach a record $5.1 billion. Over the six months to December 2024, AFG Securities settled $1.44 million in loans, a 147% jump from the first half of FY24. Strengthening its proprietary loan book has become a key strategy for the group, allowing it to boost margins while offering competitive alternatives to the major banks.
First Home Buyers and Refinancers Turning to Non-Majors
First home buyers are increasingly turning to non-major lenders, with their market share in this segment rising to 31.7% in the third quarter, up from 29.4% during the same period last year.
Refinancing activity hit a record low for the quarter, yet non-major lenders still managed to increase their share of this shrinking segment. Their portion of refinancing volumes grew to 43.6%, a 5.1% increase from the previous year.
Investor lending remained a stronghold for the major banks, who accounted for 57.9% of investor mortgage lodgements in the quarter. While this represented a slight increase from the previous quarter, it was still down 4.5% compared to the same time in FY24.
Broker Sentiment Reflects the Shift
Broker behaviour also reflects this shift towards non-majors. According to the latest Broker Pulse survey by Agile Market Intelligence, 83% of brokers reported using a non-major lender in March 2025, compared to 79% who lodged loans with a major bank.
ANZ remained the most used individual lender during the month, with 46% of brokers submitting loans through the bank. However, Macquarie Bank, a non-major, followed closely behind, underlining the increasingly competitive landscape between traditional players and their newer or smaller counterparts.
Competitive Lending Landscape Set to Continue
With non-major lenders gaining traction across key segments like first home buyers and refinancing, the traditional dominance of the big four banks is being challenged more than ever. As more brokers and borrowers look beyond the majors, the mortgage market is becoming increasingly competitive and diverse.
The trend suggests that unless the major banks adjust their offerings or broker engagement strategies, their market share could continue to slide as non-majors solidify their growing presence.
