Big Four bank home loans – current rates and offers

How the Big Four banks compare with the market

Although the Big Four banks have the largest reputation in Australia, they don't necessarily have the most competitive rates. Here's how the compare with the lowest rates and average rates.

*Lowest rates listed above are based on owner occupier products in Finder's database with LVRs of at least 80%.

Who are the Big Four banks?

Australia has 4 main banking giants and they account for roughly 75% of all mortgages in the country.

• The Commonwealth Bank of Australia. Australia's largest bank, CBA is a massive institution with a strong market share and over 15 million customers. The bank has an extensive branch network and a popular banking app. CBA owns online home loan lender Unloan.
• Westpac. Australia's second biggest bank, Westpac started life as the Bank of New South Wales in 1817. Westpac owns many well-known finance brands, including St.George, Bank of Melbourne and BankSA.
• NAB. The National Australia Bank has been around for almost 160 years and has 9 million customers, mainly in Australia and New Zealand but also across the globe. Digital lender UBank is owned by NAB.
• ANZ. This bank has a strong presence in both Australian and New Zealand. ANZ now operates in 33 markets around the world.

How much of the mortgage market belongs to the Big Four?

The Big Four are the largest players in Australia's home loan market by far. To understand just how large their share of the market is, here's a snapshot of the latest APRA data showing the value of owner occupier and investor loans held by the Big Four and some of their closest competitors.

This table shows the value of home loans "on the books" at each lender. Even the smallest of the Big Four holds more than three times more mortgages in dollar terms than the next smallest competitor.

Big Four bank home loan features

A home loan from one of the Big Four doesn't necessarily offer anything different to any other home loan lender. Features such as extra repayments, redraw facilities and offset accounts are common.

But there are a couple of areas where the bigger banks might have more of a focus.

Package loans

While by no means exclusive to the largest banks, the Big Four often advertise their premium package loans. These products let you bundle a home loan with a credit card, bank account (which functions as an offset account) and other products. These days, the big banks often have the most competitive offers on their package loans and may offer a cashback if you switch to them from another lender.

And that's a big part of why banks do package loans. They want all your business, not just your mortgage.

Basic home loans and introductory discount rates

Again, not exclusive to the Big Four, but these banks frequently offer these two types of products. Basic home loans have low variable rates (usually) but don't have offset accounts. Introductory rate loans offer a very low (usually variable) rate for an initial period, but increase later.

What are my alternatives to a home loan from the Big Four?

Mortgage lending in Australia is a thriving, crowded industry, with lenders big and small looking to lend you money. So it's always worth comparing a wide range of home loans. Alternatives to the major lenders include:

• Online lenders. If you're comfortable with applying online or over the phone an online lender could be convenient and save you money. These lenders often have the cheapest interest rates.
• Non-banks. Credit unions, building societies and other non-bank institutions offer mortgages and are also very competitive. Some of these institutions limit their lending to states, cities or geographic regions.
• Smaller banks. Many local banks can serve customers in cities, states or large portions of the country. There are also newer bank brands, often operating online, which offer cheaper rates. Some of these brands are owned by one of the Big Four.
• Fintechs and neobanks. Smaller, high-tech startups are beginning to enter the mortgage market. They can be very competitive and convenient if you're comfortable with banking via an app.

Lenders in the categories above often overlap. A small bank could be entirely online, while credit unions may have limited physical branches and a strong online service. And some banks are starting to use the technology of the fintechs.

What are the benefits of getting a mortgage with the Big Four?

There are plenty of reasons borrowers stick with NAB, ANZ, Westpac or the Commonwealth Bank:

• Convenience and service. The Big Four have the largest networks of ATMs and physical branches. For many people, face-to-face service and brick and mortar branches are very important.
• Product range. The big lenders have products for most Australian borrowers and a greater range than many smaller lenders.
• Stability. Even small Australian lenders are heavily regulated, so this shouldn't be a big concern. But the Big Four are the oldest and biggest lenders for a reason.
• Service. The Big Four have large customer service departments. They are also the most likely to have dedicated migrant banking services for non-residents.

What are the downsides of getting a mortgage with the Big Four?

In most respects the Big Four are as good as any other lender. But depending on what you're looking for, you might be better served with one of their smaller competitors. Here are a few reasons why:

• Interest rates. Most of the time, the Big Four banks don't offer the absolute lowest interest rates on the market. Smaller lenders, especially online lenders, could offer more competitive deals, with their reduced overheads and online infrastructure.
• Options for non-conforming borrowers. The Big Four don't specialise in loans for borrowers who have unique needs, such as borrowers who are self-employed, have a complex financial situation, have poor credit histories or are discharged bankrupts. This is where mortgage brokers and smaller, specialist lenders can help, as their loan policies and lending criteria may be more flexible.
• Technology and customer service. The Big Four have strong online banking and well-designed apps, but there are smaller fintech lenders and neobanks who offer faster service, better apps and more tools to help you manage your mortgage. Although the gap in technology between new players and the old banks is shrinking all the time.

Frequently asked questions

• Are the big banks safer?

  Australian lenders are relatively stable. As mentioned earlier, all registered financial institutions, regardless of their size, are regulated by the Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments Commission (ASIC).

  Financial institutions are required to hold a certain portion of capital, as they provide a permanent commitment of funds and are available to absorb losses.

  The lender takes on the risk, not the borrower. If your lender went bankrupt tomorrow you would still owe money to whoever took control over your old lender. This is quite rare, and wouldn't actually affect your mortgage contract.

• What are the big four bank interest rates?

  Interest rates from the big four banks vary depending on the loan type and your LVR. They typically do not have the lowest rates on the market though. Currently, the lowest rate available by a big four bank is 6.49% from Westpac. This is for a 2 year fixed rate with a 30% deposit. Westpac also offers the best variable interest rate at 6.89% for an owner occupier loan with a 5% deposit.