Get the Finder app 🥳

Connect your accounts & save

Finding a home loan from an ethical bank

If you want the biggest loan you’ll ever get to be from an ethical lender, you'll have to do some research. We'll show you where to start.

Australians are becoming increasingly concerned about how banks, lenders and investment funds use their money. Nine out of ten Australians want their superannuation to be invested ethically, and responsible investments totalled $622 billion in 2017.

When it comes to home loans, most people go straight to the interest rate as the deciding factor. But you can be ethical with your choice of mortgage lender and still get a good deal.

How do you measure an ethical bank?

Ethical financial institutions are ones that avoid investing in a variety of harmful industries, including:

  • Coal, fossil fuels and environmentally unsustainable industries
  • Weapons and war
  • Human trafficking or exploitative companies
  • Businesses involved in animal cruelty

By avoiding investments in these industries, it is argued, banks and lenders are doing good by refusing to fund things that have harmful consequences in the short and long terms.

There are several organisations that can help you determine whether a lender is funding unethical industries:

  • Market Forces. This is an activist organisation that runs campaigns to get businesses to behave more ethically. It maintains a comparison table of various banks and lenders and the amounts they have invested in the fossil fuel industry.
  • Responsible Investment Association Australasia. This body is one of the leading groups pushing for responsible, ethical and sustainable investments in Australia. Its annual benchmark reports provide a comprehensive overview of the ethical banking landscape.

What are my ethical home loan options?

"Ethical" remains a hard-to-define concept, and will depend in part on your own definition of the term. With that in mind, here are some options that can help you narrow down your search.

Community and customer-owned banks

The big banks are ultimately owned by their shareholders, not their customers, but there are many Australian banks that are customer-owned. These institutions are generally credit unions, mutuals and building societies.

Because they're answerable to their customers and not to shareholders, these banks often provide better customer service. And they tend to give more of their profits to charitable causes and are less likely to invest in the fossil fuel industry.

Examples of customer-owned banks with strong ethical commitments include:

  • Bank Australia. This customer-owned bank has a strong focus on responsible lending. Bank Australia also refuses to lend to the fossil fuel industry.
  • Teachers Mutual Bank. This community lender has had strong ratings from Ethisphere's World's Most Ethical Companies awards. All Teachers Mutual Bank mortgages are certified responsible investment products by the Responsible Investment Association Australasia (RIAA).
  • Community First. A member-owned institution with a commitment to "help create better and more sustainable communities" wherever they operate.

You can learn more about customer-owned banks and find specific institutions on the Customer Owned Banking Association website.

Check out our home loans from non-bank lenders

Corporate social responsibility

While not all institutions meet the standard definition of an ethical lender, most banks have some kind of corporate social responsibility (CSR) initiative.

A growing trend in large corporations, CSR involves companies giving back to the wider community through donations, services and specific programs designed to help people in need, or environmental causes.

It's worth checking out a lender's CSR policies to see if they align with causes or interests you're passionate about.

Compare a range of home loans from multiple lenders here

Related Posts

Home Loan Offers

Important Information*
Logo for UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 2.59% p.a. and a 2.59% p.a. comparison rate.

Logo for HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)
HSBC Home Value Loan - Promotional Offer (Owner Occupier P&I)

Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online.

Logo for ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR <= 80% (Owner Occupier, P&I)
ME Flexible Home Loan Fixed with Members Package - 2 Year Fixed Rate LVR <= 80% (Owner Occupier, P&I)

Lock in a competitive rate for owner occupiers for two years. Comes with a 100% offset account.

Logo for Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)

Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000. Eligible refinancers can receive a cashback of $2,000 or more.

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site