A softer half for residential lending has seen Bendigo Bank’s home loan book edge lower and its broker share retreat.
On Monday (16 February), non-major banking group Bendigo and Adelaide Bank released its financial results for the half year to 31 December 2025 (1H26) – revealing its lending stalled over the final six months of 2025.
According to its results, its total lending balance sheet fell 1.9 per cent to $84.2 billion, while residential balances were down 2.3 per cent to $65.1 billion.
The bank said gross loans contracted as it pulled back from certain third-party channels, while applications picked up late in the half.
Broker flows step back as proprietary, digital rise
Over the half, Bendigo wrote $6.8 billion in new residential loans, down from $7.9 billion in the previous period. Settlement volumes, in aggregate, were down 15 per cent on the prior half, particularly in third-party channels.
Around two-thirds of settlements were written through its branch network and digital mortgage channels, with the bank highlighting a deliberate tilt away from some broker-originated volumes following the decision to exit its "mortgage partner" business. This was largely as a result of legacy Adelaide Bank arrangements that were not renewed following the move across to Bendigo Bank in 2024 (such as its funding arrangements with mortgage manager Mortgage Ezy, which is now fully securitised) going into run off, which contracted 7.4 per cent over the half.
Overall, third-party flows - which include brokers, mortgage partners and white-label lending - fell by 21 per cent - dropping from 46 per cent in 1H25 to 36 per cent in 1H26, while their share of the back book eased to 43 per cent (down from 47 per cent a year earlier).
However, the bank said that it was seeing "momentum building across the broker channel, agribusiness and equipment finance" and expects a return to growth in residential lending in the second half.
Retail (proprietary) flows rose to 47 per cent of new mortgages in 1H26, up from 38 per cent in 2H25, while the retail portfolio share lifted to 45 per cent by December.
It attributed a large part of the uptick in proprietary flows to the new in-app digital onboarding capability, which "significantly increased new customer flows through this channel", as well as the rollout of the new Bendigo Lending Platform in all its retail branches. The bank revealed the platform has reportedly reduced time to unconditional approval from weeks to an average of seven days and resulted in a higher proportion of applications through the retail channel reaching settlement.
Digital channels – spanning NRMA, Ben Express, Timely, Qantas, and Up – edged higher, accounting for 17 per cent of new business (16 per cent in 2H25) and 12 per cent of the portfolio. Digital brand Up finished 1H25 with $2.1 billion in home loans, 27 per cent half-on-half growth, and an average loan size of $522,000.
The bank characterised the half as one of consolidation rather than a chase for volume.
“Total gross loans contracted 1.9 per cent over the half, with residential lending decreasing by 2.3 per cent,” it said – noting that around two-thirds of settlements were driven by the branch network and digital mortgage channels.
The bank added that it would continue to prioritise the deployment of capital into channels where "both the economics are complling and growth opportunities exist", largely being self-serve digital mortgages and broker-intermediated mortgages through the new lending platform.
The group will also benefit from the acquisition of the RACQ loan book, which is expected to complete later this year.
Book composition: More variable, more investors, steady risk metrics
Bendigo’s book remains skewed to owner-occupiers, who make up 77 per cent of the portfolio, broadly unchanged from the prior year.
Owner-occupied loans accounted for 74 per cent of 1H26 flows, while investor lending crept up to 26 per cent of new business and 23 per cent of the book.
Repayment type remains conservative with principal-and-interest loans dominating owner-occupied originations at 98 per cent of flow.
Among investors, 71 per cent of new loans were written on principal and interest (P&I) terms and 29 per cent on interest-only.
Rate preferences swung decisively back to variable, which comprised 94 per cent of flows and 89 per cent of the book in the half, while fixed lending dropped to 6 per cent of flows and 11 per cent of the portfolio.
The bank flagged repricing across targeted segments in the first quarter – underscoring how sensitive the largely variable book is to price moves.
New lending to first home buyers increased to 15 per cent of flow, with the group representing 16 per cent of the overall portfolio.
Credit quality has softened yet remains within what the bank describes as “manageable levels.”
Loans over 90 days past due and/or impaired rose to 0.85 per cent of the book, up from 0.82 per cent, while average new loan sizes climbed to $473,000 in 1H26 (from $448,000).
Average residential balances across the book lifted modestly to $323,000.
It described the total portfolio as “flat year on year and down 2.3 per cent on prior half” yet said it expected a return to growth in the second half.
It said home loan applications are reportedly improving, with the bank seeing the "strongest volume of applications per day in December", and expects these to settle during the third quarter.
Branch platform rolled out, business lending grows
Bendigo is leaning on technology and its physical network to support the next phase of mortgage growth.
The bank said the Bendigo Lending Platform had been rolled out to more than 400 branches, following earlier deployment through broker and digital channels.
It flagged repricing and platform enhancements as key levers “to support and drive the mortgage portfolio” in the months ahead.
Outside housing, business lending provided a degree of offset to the residential contraction, with the business book rising to $10 billion, while SME balances held at around $5 billion.
The bank said growth over the half was driven by broker-sourced business lending, portfolio funding and equipment finance.
Nevertheless, it highlighted strong competitive pressures in the business and agri lending space.
Up’s deposit base climbed to $3.5 billion, up 24 per cent over the half.
Cash earnings after tax came in at $256.4 million, down 3.3 per cent on 1H25 but 2.8 per cent higher than the prior half.
It was the first half in the bank's history that it delivered more than $1 billion in income, benefiting from higher margin and strong growth in wealth and card volumes.
[Related: Bendigo Bank credits new lending platform for resi loan growth]
