Who Are the Big 4 Banks?
The big 4 banks in Australia are Commonwealth Bank (CBA), Westpac, National Australia Bank (NAB), and ANZ. Together they hold roughly 75% of all residential mortgage lending in the country. These four institutions are authorised deposit-taking institutions (ADIs) regulated by APRA, meaning they hold customer deposits and are subject to strict capital and prudential requirements.
The big 4 have extensive branch networks, large workforces, and decades of brand recognition. They offer a full suite of banking products beyond home loans, including savings accounts, credit cards, insurance, and business banking. Many Australians grew up banking with one of the big 4 and naturally turn to them when it comes time to get a home loan.
However, size and familiarity do not always translate to the best deal. The big 4 banks carry significant overhead costs, including branch leases, large staff counts, and legacy technology infrastructure. These costs are ultimately reflected in their pricing. While the big 4 regularly advertise competitive headline rates, their standard variable rates and back-book pricing (the rate existing customers pay) are often higher than what non-bank lenders charge.
Each of the big 4 also has a digital-only subsidiary brand. CBA has Bankwest, Westpac has St. George and Bank of Melbourne, NAB has ubank, and ANZ has various regional brands. These subsidiaries sometimes offer sharper pricing than the parent brand, but they are still part of the same institution.
Who Are Non-Bank Lenders?
Non-bank lenders are mortgage providers that are not authorised deposit-taking institutions. They fund loans through securitisation and wholesale markets rather than customer deposits, and include lenders like Pepper Money, Liberty Financial, Resimac, La Trobe Financial, Firstmac, and dozens of others. These lenders are regulated by ASIC and must hold an Australian Credit Licence, but they are not regulated by APRA in the same way banks are.
Non-bank lenders have grown significantly in Australia over the past two decades. They compete by offering lower rates, faster approval times, and more flexible lending criteria than the major banks. Without the cost burden of branch networks and large workforces, non-bank lenders can pass savings directly to borrowers through sharper pricing.
Many non-bank lenders specialise in areas where the big 4 struggle. Pepper Money, for example, is known for lending to borrowers with credit impairments or non-standard income. Liberty Financial offers flexible solutions for self-employed borrowers and complex scenarios. La Trobe Financial specialises in commercial and residential lending for borrowers who fall outside standard bank criteria. Resimac and Firstmac compete aggressively on rate for standard borrowers.
Non-bank lenders are predominantly available through mortgage brokers rather than direct to the public. This is actually an advantage for borrowers, as it means your broker can compare non-bank options alongside bank options and recommend the best fit for your specific situation. For more on how brokers access these lenders, see our broker vs bank direct comparison.
Side-by-Side Comparison
This table compares big 4 banks and non-bank lenders across the six factors that matter most when choosing a home loan in Australia.
| Feature | Big 4 Banks | Non-Bank Lenders |
|---|---|---|
| Typical variable rates (owner-occ P&I) | 6.09% to 6.49% | 5.79% to 6.19% |
| Approval speed | 5 to 15 business days (often longer) | 2 to 7 business days (many lenders) |
| Lending criteria flexibility | Strict, standardised assessment | More flexible for self-employed, alt-doc, non-standard |
| Branch access | Extensive branch network nationwide | Minimal or no branch presence |
| Offset/redraw features | Full offset and redraw available | Most offer full offset and redraw |
| Credit impaired lending | Generally not available | Specialist products available (Pepper, Liberty, La Trobe) |
When a Big 4 Bank Is the Right Choice
A big 4 bank is the right choice when you value branch access, need a full banking relationship, have a strong existing relationship with competitive retention pricing, or are applying for a complex product like a construction loan. Here are the specific situations where a big 4 bank has the edge:
- You want in-branch service. If face-to-face banking is important to you and you want to walk into a branch for help with your home loan, the big 4 have unmatched branch networks. Non-bank lenders are predominantly phone and online.
- You have a strong existing relationship. If you have your salary, savings, credit cards, and other products with one of the big 4, they may offer retention pricing or package discounts that bring their rate close to what non-bank lenders charge. Always benchmark this with a broker to confirm.
- You need a construction loan. Construction lending is complex and not all non-bank lenders offer it. The big 4 banks have established construction loan processes with progress payment structures. See our construction loan guide for details.
- You prefer one institution for everything. If consolidating your banking under one roof for simplicity appeals to you, the big 4 offer savings accounts, credit cards, insurance, and home loans in a single package. Non-bank lenders typically only offer the mortgage.
- You are buying at auction and need fast pre-approval. Some big 4 banks can provide fast pre-approvals for existing customers using their internal data, which can be useful in competitive auction markets.
When a Non-Bank Lender Is Better
A non-bank lender is typically the better choice when you want the sharpest rate, need faster approval, have a non-standard income or credit history, or are an investor looking for flexible lending criteria. Here are the situations where non-bank lenders consistently outperform the big 4:
- You want the lowest rate. Non-bank lenders often undercut the big 4 by 0.20% to 0.50% on variable rates. On a $600,000 loan, a 0.30% rate saving translates to roughly $1,800 per year in interest savings. Over 30 years, that compounds to tens of thousands of dollars.
- You are self-employed. Non-bank lenders like Liberty and Pepper have far more flexible income assessment policies than the big 4. They accept alt-doc applications, use add-back methodologies for business expenses, and can work with one year of financials instead of two. See our self-employed home loan guide.
- You have a credit impairment. If you have defaults, judgments, or a poor credit history, the big 4 will typically decline your application outright. Specialist non-bank lenders like Pepper, Liberty, and La Trobe have products specifically designed for credit-impaired borrowers, with rates that reflect the risk but still provide access to lending.
- You need fast approval. Non-bank lenders frequently approve standard applications in 2 to 5 business days, compared to 7 to 15+ days at the big 4. If you are on a tight settlement timeline or competing in a fast-moving market, approval speed can make the difference.
- You are a property investor. Non-bank lenders often have more favourable policies for investors, including higher LVR limits, interest-only availability, and flexible serviceability assessment. Read our property investment guide.
- You do not need a branch. If you are comfortable managing your home loan online and by phone, you are paying a premium for branch access you will never use by going with a big 4 bank.
How a Broker Helps You Choose
A mortgage broker compares both big 4 bank and non-bank lender options across their full panel, recommending the lender that best fits your rate requirements, approval timeline, and financial situation. This is where brokers add the most value. Rather than you researching dozens of lenders individually, your broker assesses your scenario and shortlists the lenders most likely to approve you at the best rate.
Brokers have direct access to non-bank lenders that most borrowers have never heard of. Lenders like Pepper, Liberty, Resimac, and La Trobe do not have consumer-facing branches or marketing campaigns aimed at the general public. They are primarily available through the broker channel, which means going direct to a big 4 bank means you are automatically excluding some of the most competitive lenders in the market.
A good broker will present you with a comparison showing both bank and non-bank options for your specific loan amount, LVR, and property type. They will explain the trade-offs in rate, features, approval speed, and flexibility so you can make an informed decision. Importantly, under the Best Interests Duty, your broker is legally required to recommend the loan that is most appropriate for you, regardless of whether it is a bank or non-bank product.
At Lendera, our panel includes more than 60 lenders, covering all four major banks, their subsidiary brands, and a wide range of non-bank lenders. This means we can compare the full market for you and find the genuine best option, not just the best option from one category.
Compare Bank and Non-Bank Rates for Your Loan
See personalised rate options from big 4 banks and non-bank lenders across our panel of 60+ lenders. Free, no obligation, no personal details required.
See My Rates →