NAB is sharpening its proprietary mortgage push while claiming that it is reserving a premium proposition for selected broker partners.
National Australia Bank (NAB) is competing “more aggressively” for proprietary home loans and targeting a narrower pool of broker business, as the major lender seeks stronger mortgage returns following a major shift in its lending mix.
The bank’s full-year results, released on Thursday (5 November), revealed that proprietary channels accounted for 52.5 per cent of new mortgage flows in 2H26, up from 47.7 per cent in the preceding half.
Brokers’ contribution consequently fell from 52.3 per cent to 47.5 per cent over the same period.
Speaking to The Adviser on a media call, NAB CEO Andrew Irvine said the bank was responding to deteriorating mortgage economics, with pressure intensifying following the federal budget.
“One of the things that we’ve seen in the mortgage market, and it’s been exacerbated since the federal budget, has been that system returns have been under material pressure,” Irvine said.
Irvine said that environment was influencing which mortgages NAB was prepared to add to its balance sheet, particularly through third-party distribution.
“As a bank, we want to make sure that we’re deploying our capital to get a fair return for our shareholders, and we’re finding that that’s harder to do in the broker market,” he said.
“So we’re being very economically rational in the flow that we want to book on our balance sheet and the flow that we don’t.”
However, he stressed that NAB remained willing to compete for selected broker-originated loans, while directing greater competitive effort towards its proprietary business.
“There still is good flow in the broker market that we’re choosing to compete for, generally in lower LVR bands and at larger size tickets,” he said.
“But beyond that, we are choosing to compete more aggressively in our proprietary business because we can get better economic outcomes there, and that’s working for us.”
Premium broker proposition targets a smaller group
Alongside its proprietary expansion, NAB outlined a targeted broker service model, including the initial launch of a “differentiated service proposition” for what it described as premium partners.
The approach forms part of its pursuit of “strategic broker relationships” and a shift towards higher-returning, lower loan-to-value ratio (LVR) mortgages.
Irvine said the bank had examined the lending generated through its broker network to identify relationships that aligned more closely with its appetite.
“We’ve done a fair bit of work to look at the flow and the volumes that we get from the broker channel, and what we’ve done is we’ve identified a number of brokers that are providing us with more of the flow that we would want to book,” he said.
He said NAB intended to strengthen those relationships through a more distinctive service offering, with faster delivery central to its ambitions.
“What we’re going to do is we’re going to work more effectively with those brokers, provide them with more distinctive service and speed, so that we basically will become hopefully the preferred bank for that subset of brokers,” he said.
Irvine indicated that concentrating its efforts on a relatively small proportion of brokers would make that service ambition more achievable.
“That’s much easier to do when you focus on 5 to 10 per cent of brokers than it is on the whole broker community. So, we’re really going to lean in on providing those subset of brokers with the best possible banking experience, and we think that will work for us,” Irvine said.
NAB’s direction contrasts with the broader distribution market, with Mortgage and Finance Association of Australia-commissioned Cotality data showing that brokers facilitated a record 81.6 per cent of new Australian residential home loans in the June 2026 quarter.
Within NAB’s existing portfolio, proprietary lending’s share increased from 46.2 per cent in March to 47.1 per cent in September, while brokers retained 52.9 per cent, down from 53.8 per cent over the same period.
Proprietary investment builds as mortgage growth moderates
The results extend a strategic emphasis evident in NAB’s 2024 investor presentation, which identified investment in its banker salesforce and greater use of lead-generation tools as key priorities for growing proprietary lending.
In the latest results, NAB reported “good progress” across its three priorities for improving returns: business banking, deposits, and proprietary home lending.
The bank also reported a 75 per cent increase in the number of customers contacted, supported by more personalised leads.
Separately, early outcomes for staff using agentic artificial intelligence tools included a 75 per cent reduction in the time needed to identify customer insights and a 50 per cent reduction in customer lead preparation time for personal bankers.
The channel shift occurred alongside a more modest overall mortgage expansion.
NAB’s mortgage book increased by approximately 1.1 per cent over the six months to September and 3.6 per cent over the year, compared with system housing credit growth of around 7 per cent annually.
New lending originations fell to $39 billion from $47 billion in the corresponding prior-year half, a reduction of $8 billion, or approximately 17 per cent.
Looking ahead, the lender said it expected a more challenging market, forecasting system housing credit growth of approximately 2.6 per cent in FY2026–27, down from around 7 per cent in FY2025–26.
It also identified increased competition, elevated refinancing activity, and lower system returns as major characteristics of FY26–27’s mortgage environment.
Lower origination LVRs accompany rising repayment stress
The results also showed that average loan size per account declined from $633,000 in March to $613,000 in September, while LVR at origination fell from 67 per cent to 64.9 per cent.
Meanwhile, mortgage repayment stress increased.
Home loans at least 90 days past due reached 1.09 per cent in September, compared with 1 per cent in March and loans at least 30 days overdue rose from 1.58 per cent to 1.69 per cent, while impaired mortgages stood at 0.10 per cent.
Irvine said borrowers relying on business income to meet mortgage repayments were showing greater signs of strain than those servicing loans through PAYG earnings.
“It is right to say that as we’ve been watching our mortgage book, we’ve seen a little bit more stress emerge in what I would call customers who use business income to service the home loan versus customers who are, you know, P A Y G to service the income,” he said.
“So that’s something I think we’ll need to look at. So I think it’s a fair assertion that some of our small-business customers are under a little bit more pressure, cash flow pressure.”
[Related: NAB proprietary flows hit 50% in March]
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