Mortgage switching surges as lenders battle for retention

On a balance basis, more than $1 billion moved daily or about 1.3 customers carrying more than $700,000 in mortgages every minute.

The result points to a more intense contest for existing borrowers as lenders seek growth in an environment where retaining a loan can be as crucial as originating a new one.

Home-loan churn meanwhile rose by more than $41 billion over FY26, a 13 per cent increase on FY25, while the number of customers leaving their lender increased by around 48,000.

Refinancing was the principal driver, with the number of customers moving an existing mortgage to another lender increasing by 9 per cent in FY26 from the prior financial year.

By contrast, the number of customers exiting their bank after selling a property declined 3.1 per cent in the June quarter compared with the same period a year earlier.

Elula said that the figures elevated retention from a customer-management issue to a central source of potential balance-sheet growth.

“This increasing switching trend indicates that addressing customer churn is a necessary and immediate growth lever for lenders,” Elula said.

Refinancers dominate churn

The analysis found that 63 per cent of churning borrowers were refinancing an existing property with another lender.

Elula said lenders needed to identify customers at risk of switching before a formal refinance process was underway, rather than relying on last-minute retention responses.

“This is the largest share of churn, and the most preventable by lenders with proactive engagement, better pricing, and timely retention offers aimed to keep these customers before they start shopping elsewhere,” Elula said.

The remaining 37 per cent of mortgage churn was linked to property sales, with nine in 10 property sellers taking their next lending requirement to a competing lender.

Elula said that the point of sale was therefore not simply the end of an existing mortgage, but a critical moment in determining where a borrower’s next loan would be written.

“Banks that fail to engage with timely, personalised conversations at this juncture risk losing that customer’s new lending need to competitors,” it said.

Competitive pressure widens

Elula CEO Josh Shipman said several economic and policy forces were combining to make borrowers more willing to reconsider their lender relationships.

“At this point in time, we are experiencing an almost perfect storm that is driving customer churn in the banking sector,” Shipman said.

“Churn is accelerating due to cost-of-living challenges; government policy changes to negative gearing; rising interest rates; and falling property prices.”

The analysis also showed that the competitive consequences of churn were not being shared evenly.

Macquarie Bank recorded the strongest mortgage-book expansion, growing at 3.9 times the system rate and adding more than $39 billion in home lending in FY26 compared with FY25.

Among the major banks, the Commonwealth Bank of Australia (CBA) grew in line with the system at 1.0 times the market rate.

Westpac grew at 0.9 times the system rate, the National Australia Bank (NAB) at 0.7 times, and Australia and New Zealand Banking Group at 0.6 times, leaving each below overall market growth.

The Bank of Queensland (BOQ) recorded the largest contraction, with its home-loan book declining by around $5 billion during FY26 or -1.3 times the system growth rate.

Bendigo and Adelaide Bank also contracted, losing nearly $450 million or -0.1 times the system rate.

Most mutuals and customer-owned banks posted above-system growth, although the drivers differed.

Teachers Mutual grew at four times the system rate following its merger with Australian Mutual, while Newcastle Greater Mutual expanded at 1.6 times the system rate through organic growth.

[Related: Mortgage growth significantly eases among top 10 ADIs]