Refinancing activity has grown from approximately 438,000 to over 640,000 loans annually over the past six years, with banks facilitating up to 80% of all external refinances, according to a new report commissioned by the Australian Banking Association (ABA) and prepared by economics firm Mandala.
The report, The Essential Infrastructure: How Australian Banks Power the Economy finds that refinancers can achieve interest rates up to 0.35% lower than their existing rate, saving up to $2,000 per year or as much as $59,000 over the life of a loan.
The major banks' combined share of home loans has also fallen from 79% to 74% between 2019 and 2025 — a broadening competitive landscape that brokers are well placed to navigate on behalf of clients.
ABA CEO Simon Birmingham (pictured) said mortgage holders were among the clearest beneficiaries.
"Strong competition amongst banks is seeing more than 640,000 mortgage holders refinance their home loans each year," Birmingham said in a media release. "High refinancing rates show that barriers to changing banks have come down, while competition has gone up, with evidence showing that switching can save the average household up to $2,000 a year in mortgage interest payments."
The report also documents the scale of bank involvement in residential construction.
In FY25, banks committed $49 billion in construction finance, potentially enabling approximately 110,000 new homes — a critical contribution given the National Housing Accord's target of 1.2 million new dwellings over five years.
That target is under pressure. The NHSAC's State of the Housing System 2026 report estimates around 980,000 new homes would be delivered over the Accord period — a shortfall of at least 220,000 against the government's target, even before accounting for recent global disruptions to construction costs and supply chains.
On the existing homes side of the market, banks supported 65% of all property settlements in FY25, equivalent to 445,000 transactions.
Birmingham noted the scale of support for buyers entering the market for the first time.
"Banks have helped over 670,000 first home buyers realise the dream of homeownership in the past five years, while supporting the construction of over 110,000 new homes last year," he said.
The competitive lending picture sits alongside a less visible but equally significant role banks are playing for borrowers under financial pressure. More than 280,000 hardship notices relating to home loans were responded to by banks in FY25, with the overwhelming majority resolved without foreclosure — 99.2% of hardship cases ended with households retaining their homes, according to the report's analysis of ASIC data.
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