Australian borrowers have a range of lenders to consider when choosing a comparing home loans. While major banks remain an important part of the mortgage market, some borrowers also explore digital banks and other lenders in search of suitable rates, lower fees or a different customer experience.

According to a recent study by Roy Morgan, there has also been a shift in consumer preferences in Australia with clients increasingly opting for digital banks and Macquarie to meet their mortgage requirements. Better interest rates, lower fees, and more efficient service than the usual Big Four banks are the main drivers of this trend.

In 2024, nearly 670,000 Australians switched their main financial institution (MFI), with the big four banks experiencing a net gain of only 9,000 customers. However, the digital bank’s net gain was 31,000 customers. The biggest net win, though, was by Macquarie, which achieved a net gain of 43,000 customers. This trend is expected to continue in 2025, especially among the younger customers who are seeking more optimal financial solutions.

Key Drivers of the Shift

• Better Interest Rates: The main reason cited by 40% of the customers who switched from a Big Four bank to a digital bank was poor interest rates. Digital banks and Macquarie have been successful in attracting customers through competitive rates which are quite appealing amid the ongoing cost of living crisis.
• Lower Fees: High fees were stated as a considerable cause by 22% of those who switched banks. Digital banks and Macquarie drew customers by providing lower fees which are known to be attractive to consumers.
• Improved Service: Bad service was stated as the main reason for switching by 35% of those who left their big four banks. Digital banks and Macquarie addressed this issue by giving priority to better customer service and leveraging digital channels to deliver an improved and faster customer experience.

Looking Ahead

The digital banks and Macquarie hungry for market share have changed their focus to mortgages and comparing home loans. This trend is expected to grow with a particular focus on younger customers in 2025, especially, in search of better financial solutions. However, if the substantial banks have kept their current trends and the consumers remain uninterested in them, a rate cut may not be enough to recover consumers’ trust in them.

The Role of Digital Banks in the Mortgage Market

Digital banks have evolved by offering attractive deposit services, including low costs associated with high-yield savings accounts and competitive interest rates. Now they are beginning to change their focus on providing interesting mortgage products to keep on engaging younger customers. This trend in the main, primarily relates to the Millennial cohort, which steadily is more inclined to ask for financial management support and not particularly the one that is the most convenient

With drastic changes in the mortgage landscape, the choice of the lender is of utmost importance. OM Financial Services can compare mortgage loans for borrowers or help them find better comparing home loans offers. Our team is here to guide clients through the current financial jungle and give them options that are their best choices. Call us at 478 876 967 to Book an Appointment and discuss your financial goals with us.

Frequently Asked Questions

Why do Australians switch mortgage lenders and comparing home loans?

Borrowers may switch to seek a more suitable interest rate, lower fees, better comparing home loans features or a different customer experience. The benefits depend on the loan and the borrower’s circumstances.

Are digital banks always cheaper than major banks?

No. Rates and fees vary by lender and product. Compare the overall cost and eligibility requirements rather than assuming one category of lender is always cheaper.

Can I refinance if my financial circumstances have changed?

You can explore your options, but a new lender will assess your current income, expenses, debts and other eligibility factors. Approval is not guaranteed.