Westpac lifts proprietary share as direct push accelerates

“The proportion of proprietary lending increased over the year, responding to a targeted strategy to improve performance of this channel,” Westpac said.

Looking at the whole group, proprietary flows were up from 34 per cent in the first half and 32.6 per cent a year earlier.

The increase in direct lending flows was more pronounced at the flagship Westpac brand, where proprietary share reached 42.4 per cent, compared with 38.2 per cent in 1H26 and 34.8 per cent in 2H25.

That represented a 7.6-percentage-point annual increase for the Westpac brand and a 4.6-percentage-point rise across the group.

The bank also accelerated the turnaround times for its direct lending flows. Its operating figures showed that the median time to decision was 3.9 days through proprietary channels in 2H26, against 4.8 days through third parties.

Direct lending gains come amid continuing investment

Westpac presented the results under the banner of “improving proprietary home lending”, alongside figures showing that proprietary home loan customers held an average of 3.3 products, compared with 2.8 among third-party customers.

The bank said that its proprietary priorities included increasing brand consideration, differentiating its offering, improving lender effectiveness, streamlining application requirements and reducing products.

The bank also identified better-quality leads through its Westpac Intelligence capability as part of the strategy.

Chief executive Anthony Miller positioned first-party mortgage origination as an ongoing priority within the bank’s wider effort to support customers.

“We also increased first-party mortgage origination and this remains a priority,” Miller said.

“We are investing in our people and technology to support future growth, while taking a disciplined approach to costs, this includes hiring more bankers.”

Despite the improvement, Miller acknowledged that Westpac still had ground to make up against some competitors.

“Progress is good, but our proprietary mix remains below some peers,” he said.

Settlements per banker increased 3 per cent half on half while digital sales increased 76 per cent year on year and accounted for 81 per cent of sales, up from 50 per cent in 2H25.

Broker share holds firm as mortgage momentum moderates

Despite the increase in new lending through the direct channel, broker-originated loans took up a larger proportion of the group’s overall portfolio.

Proprietary-originated mortgages represented 41.6 per cent of outstanding balances in September, down from 42.7 per cent a year earlier.

The bank said proprietary-originated balances increased from $212 billion in September 2025 to $217 billion in March 2026 and $221 billion in September.

Third-party-originated balances, meanwhile, grew from $285 billion to $301 billion and then $311 billion over the same dates. Therefore, third-party balances increased by $10 billion during the second half, compared with $4 billion through proprietary channels.

Total mortgage balances at the bank, excluding RAMS, reached $532 billion, up from $518 billion in March and $497 billion a year earlier.

Overall, Westpac reported annual housing growth of 7 per cent, equivalent to 1.1 times system, while its second-half growth tracked system at 1.0 times.

Home loan growth slowed in the second half (at 2.7 per cent, down from 4.2 per cent in the preceding half), likely due to rising interest rates and dwindling buyer appetite.

The bank added that average monthly applications declined from 33,000 in the September 2025 quarter to 28,000 in the corresponding 2026 quarter, a 15 per cent fall.

The softer mortgage momentum accompanied pressure on margins, with group net interest margin falling 3 basis points over the half to 1.86 per cent.

Borrower mix shifts as offsets build

Owner-occupied lending continued to account for the majority of new lending, increasing from 60.9 per cent to 62.5 per cent in the second half, while investor share declined from 39.1 per cent to 37.5 per cent.

First home buyers (FHB) represented 12.6 per cent of new flows.

The average new loan size declined from $575,000 in the first half to $557,000 in the second.

However, offset balances rose over the year. Offset balances reached $81 billion in September, up from $71 billion a year earlier.

More than a quarter (28 per cent of customers) are at least two years ahead on their mortgage repayments, while 19 per cent are between six months and two years ahead.

Around a fifth were up to six months ahead, 17 per cent are up to one month ahead, 13 per cent were on time, and 1 per cent are behind their repayment schedule.

Westpac reported approximately 42,000 financial hardship assistance and disaster relief packages during the year, and loans in hardship fell to 0.6 per cent, below the 2024 level.

Major banks pursue stronger proprietary distribution

Westpac’s proprietary gains sit within a broader major-bank focus on direct distribution, with its major bank peer National Australia Bank reporting in May that proprietary channels accounted for 50 per cent of new home loan business.

The Commonwealth Bank of Australia (CBA), which is similarly pursuing a multi-year effort to favour its direct channel, conversely revealed in August that the broker share of new lending had increased from 46 per cent to 49 per cent, while the proprietary share had eased from 54 per cent to 51 per cent. (Yet across its outstanding portfolio, proprietary channels still represented 54 per cent and brokers 46 per cent.)

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, ANZ chief executive Nuno Matos has also committed to strengthening the bank’s own mortgage sales capability.

“Without compromising our great broker relationships, we will materially invest in and train our own mortgage sales force, aiming to increase the performance and the number of lenders in our branches by up to 50 per cent over the next five years. This is already underway,” he said.

[Related: Mortgage growth flatlines at Australia’s biggest banks]