Proprietary lending has grown by 5 per cent in a year, as the major bank prioritises first-party channel originations to increase margins.
Westpac Banking Corporation (Westpac) has revealed its financial results for the first half of the financial year 2026 (1H26), outlining that its focus on boosting proprietary lending has begun to bear fruit.
According to the Westpac results, mortgage balances were up 7 per cent in the six months to March 2026, with Australian home loan balances increasing by 1.2x system, to $518 billion (excludes RAMS) – an additional $68 billion in home lending.
The average loan size increased to $575,000 in 1H26, $25,000 more than in 1H25.
The major bank saw an “improvement in proprietary mortgage flow”, with 1H26 rising to 34 per cent, up from 32.4 per cent in 1H25 and up from 32.6 per cent in the prior six-month period.
It said that, in order to support proprietary mortgage growth, it was investing in home finance managers, with around 60 lenders onboarded in 1H26, as well as faster onboarding and improving retention.
Service levels in the first-party channel were also improving, with time to decision decreasing to 3.8 days – down from 4.6 days in 1H25.
The bank has also launched a ‘book a banker’ program, which enables borrowers to book in to see home loan specialists.
In an investor call, Westpac CEO Anthony Miller said: “Importantly, we returned Westpac’s first-party lending to growth. This reflects deliberate work to get the first-party proposition right.”
He said this included an improvement in “addressing the basics, which have made it easier for our people to serve our customers well”.
Miller added that the bank has also been looking to attract Australian mortgagors with targeted policy enhancements for self-employed and investor lending, the latter of which continues to make up around 39 per cent of new flows.
The bank CEO also noted that around 86 per cent of home loan customers were ahead of their repayment schedules (including offset balances), with 37 per cent of all accounts being two years ahead of their schedule.
Offset balances increased yet again. Westpac’s Australian mortgages now have $78 billion in offsets - up from $73 billion just six months earlier. The bulk of Westpac borrowers are mass affluent – with 65 per cent having an income over $200,000.
Despite rising interest rates, delinquencies have been falling at the bank, with 90+ day delinquencies falling to 0.57 per cent – down from 0.74 per cent in March 2025.
However, Miller noted that growth in home lending has reduced more recently, partly as a result of rising interest rates (which commenced in February 2026).
He said: “We have had a more pronounced slowing in home lending, our most interest-rate sensitive portfolio. Mortgage applications eased in April following a strong start to the year.”
Hardship applications and personal loan applications have also increased modestly, as anticipated, given rate increases.
Miller also noted an “emerging challenge” of artificial intelligence, which could result in borrowers more actively switching and chasing rates.
“I do acknowledge that the introduction of AI and agentic programs means that customers will likely have the means to move and identify best pricing all the time in real time and we understand that emerging challenge and are definitely working to make sure that we can meet that challenge… I think that’s likely the future of banking at some point, more broadly,” he said.
Outside of mortgages, Westpac also saw strong growth in its business lending, which is also prioritising proprietary originations.
Business lending increased 16 per cent to $890.3 billion, up from $829.4 billion in 1H25.
Business credit growth at Westpac is majority skewed to larger businesses – which is a core focus for Westpac. Indeed, the major bank is the largest lender to the renewables industry in Australia.
First-party business lending increased from 52 per cent to 59 per cent of new lending, with 70 per cent of new lending to existing customers (12 months to March 2026)
Business lending growth was particularly strong in health (19 per cent) and agri (15 per cent). Invoice finance increased by 12 per cent.
The bank noted that it wants to focus on SME lending – particularly in invoice financing and working capital capabilities, which are still a small part of the business.
Overall, Westpac’s gross lending book (covering mortgages, business, institutional and New Zealand lending) sits at $890.3 billion.
All 4 majors pushing proprietary lending
The major banks are nearly all actively chasing proprietary lending growth to create stronger returns for shareholders, with National Australia Bank (NAB) revealing this week that its proprietary channel now originates 50 per cent of all new home loan business.
The Commonwealth Bank of Australia (CBA), which is on a different financial calendar than Westpac and NAB, revealed in February that its proprietary channels captured 67 per cent of new CBA-branded home loans in its 1H26.
Australia and New Zealand Banking Group (ANZ) is the outlier among the major banks, with its broker flows continuing to rise. Distribution is increasingly skewed to intermediated channels, with brokers originating 62 per cent of ANZ’s home loan portfolio in 1H26, up from 60 per cent a year previously, while proprietary slipped from 40 to 38 per cent.
However, this is expected to change, with the new CEO Nuno Matos revealing this week a renewed proprietary push as a core priority. He spelled out plans to “invest and train mortgage sales force” and “increase lenders in branches up to 50 per cent more over the next 5 years.”
[Related: Westpac grows lending book and broker flows]
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