Fresh data has revealed that banks are pumping a record amount of credit into housing and business.
A new report from the Australian Banking Association (ABA), titled How Australian banks power the economy, has found that banks are writing record volumes of loans across housing, small business, and agriculture.
The ABA‑commissioned analysis said that banks are now so intertwined with household finances that most Australians effectively own a slice of the sector.
According to the report, 65 per cent of banks are owned by Australian households either directly through share portfolios or via superannuation funds, with those holdings valued at about $470 billion, up from $240 billion in 2010.
ABA CEO Simon Birmingham said this level of ownership underpinned the sector’s role in the broader economy.
“Australia has one of the strongest banking sectors in the world. Strong banks allow for more lending for people to buy homes, credit for businesses to grow and more capacity to support community initiatives such as disaster relief,” he said.
Housing lending at scale, especially for FHBs
The report also said that this strength was translating into record credit flows into the housing market.
Over the past five years, more than 670,000 first home buyers (FHBs) have taken out loans with banks, according to the report, while construction finance over the past year helped deliver around 110,000 new dwellings.
The ABA said that banks wrote $49 billion of loans in the financial year 2025 specifically aimed at boosting the stock of new homes.
Over the same period, about 65 per cent of all property settlements – roughly 445,000 transactions – involved a bank loan.
Birmingham said the lending data showed that the sector was helping to keep the housing pipeline moving despite cost and supply pressures.
“Banks have supported over 670,000 first home buyers to get into the housing market over the last five years while construction lending helped build 110,000 new homes last year,” he said.
Refinancing and competition cutting mortgage costs
A major theme running through the report is that home‑loan competition remains intense, with switching volumes used as the key proof point.
The ABA said more than 640,000 households were refinancing their mortgages each year as borrowers respond to price signals and promotional offers.
Birmingham said this was translating directly into savings.
“Households with mortgages have been the big beneficiaries of a highly competitive banking sector,” he said.
He said that the refinancing trend reflected reduced friction in moving between lenders and added: “High refinancing rates show that barriers to changing banks have come down, while competition has gone up, with evidence showing that switching can save the average household up to $2,000 a year in mortgage interest payments.”
SME and farm lending also step up
Beyond mortgages, the ABA pointed to strong growth in credit to small and medium‑sized firms, as well as regional industries.
The report said banks provided about $180 billion in new lending to SMEs in 2025, an increase of 82 per cent compared with 2020, and noted that average loan margins for this segment had fallen by nearly 39 basis points over the same period.
Lending to agriculture has risen as well, with support for the sector lifting by 41 per cent since 2020 to around $141 billion.
Birmingham said this pattern showed competitive dynamics were not confined to home loans.
[Related: ANZ flags mortgage slowdown as Westpac sees demand slip]
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