Australia’s financial landscape has undergone a notable structural shift in the past year, as elevated interest rates, strict serviceability buffers, and changing workforce dynamics alter how Australians borrow money and the lenders they are turning to.
It’s been the perfect environment for non-bank lenders, which have been quickly expanding their presence across both residential housing and business credit markets.
Driven by competitive capital market funding and tailored underwriting standards, the non-bank sector is proving essential for self-employed individuals, gig-economy workers, and borrowers with unconventional income streams who frequently fall outside standard banking criteria.
Indeed, data from the Reserve Bank of Australia (RBA) highlights the momentum behind non-bank expansion. As of March 2026, non-bank lenders account for around 6 per cent of Australia’s total financial assets. While still a small portion of the overall system, their share of housing credit, and an even larger share of business credit, has maintained a steady upward trajectory in the 2020s.
The supply of business credit has been strong, with non-bank business lending growth having really picked up pace since 2022, particularly for smaller loans to SMEs. Small businesses are increasingly drawn to non-banks that specialise in segments where banks are less active or inactive (including car/asset finance, unsecured SME finance, and trade finance).
This trajectory has been underpinned by favourable funding conditions in capital markets, especially seen through early 2026, which enabled non-banks to price products competitively and scale their balance sheets.
In its March Financial Stability Review, the RBA outlined the distinct role non-bank lenders and private credit providers play: “Credit extended by non-banks has been growing at a faster pace than for banks, though financial stability risks from non-bank lenders are limited by their relatively small size. The sector plays an important role in the provision of finance in areas where banks tend not to compete. Lending by both traditional non-bank lenders and private credit has continued to grow strongly.”
Despite serving higher-complexity borrowers, non-banks have maintained robust asset quality. Available data indicates that the share of non-bank housing loans in arrears remains slightly below 1 per cent – only marginally higher than the arrears rates recorded by traditional bank, reflecting disciplined credit assessment alongside specialised risk management strategies.
Given the fact that many non-banks do not have the benefit of a physical distribution footprint, the time and energy that these lenders have been putting into the broker channel have been substantial. And brokers have been turning to non-banks for solutions in their droves. According to the monthly Broker Pulse survey from Agile Market Intelligence, around 48 per cent of brokers used a non-bank lender in June 2026, with 82 per cent saying client circumstances were the primary reason for choosing them (see page 6 for more).
Breaking barriers
A clear indicator of the non-bank sector’s growing value to the lending market occurred earlier this year when the Australian government’s 5 per cent Deposit Scheme welcomed its first non-bank lender to the panel. Liberty Financial joined the lender panel in early August, with the inclusion marking the beginning of broadened access to the government-backed property initiative.
Housing Australia noted that bringing a specialist non-bank onto the panel would directly benefit home buyers by boosting market competition and accessibility:
“The addition of Liberty provides eligible home buyers with greater choice and access to the scheme while maintaining the same safeguards and standards and consumer protections that apply across the Scheme,” Housing Australia said.
“Expanding the lender panel helps improve accessibility to the scheme and supports more Australians on their pathway to home ownership.”
The integration of non-banks into mainstream finance has also extended into other infrastructure. In July, non-bank lenders were brought into Australia’s open banking regime, for example, so that they can begin sharing product data (including interest rates, fees, charges, and eligibility criteria) through the Consumer Data Right (CDR).
Speaking in July, ACCC commissioner Dr Ian Oppermann emphasised the significance of this expansion for market transparency and said: “The expansion of the Consumer Data Right to non-bank lenders is a significant step in giving consumers access to information about the broadest possible range of financial products.
“The inclusion of non-bank lenders in the CDR will give consumers a more complete picture of some of the largest household costs, including their mortgage, power bill, and car finance and personal loans.”
The move brings at least 35 new data holders into the CDR framework, with consumer data sharing for non-bank lenders to be phased in from 9 November 2026.
Once fully operational, borrowers can leverage their operational financial data to compare specialised products side by side with bank offerings, streamline loan application workflows, and evaluate switching opportunities with greater ease.
With non-banks coming into the mainstream as they join an increasing number of government-backed initiatives, it seems likely that more brokers – and their clients – will turn to the segment for their lending needs in future.
