EY Australia assessment highlights rate advantages and community returns from mutual lenders, but awareness remains low
Australia's customer-owned banks are offering basic variable home loan rates between 0.25% and 1.05% lower than those of the major banks, according to a new report commissioned by the Customer Owned Banking Association (COBA).
The Assessment of the Impact of Customer-Owned Banks in Australia 2026, developed by EY Australia, examined the 25 largest customer-owned banks and found consistent rate advantages alongside sustained customer satisfaction ratings above 80% over the past two decades.
"Customer-owned banks are Australia's best kept secret when it comes to your finances," said COBA chief executive Michael Lawrence (pictured top). "They deliver competitive rates, outstanding service and placing your money with a mutual means more growth for the wider community."
With the national average mortgage sitting at approximately $736,000, a rate reduction of 1.05% translates to annual interest savings of roughly $7,728. Even the more modest 0.25% reduction yields savings of $1,840 per year.
"Customer-owned banks play an important role in supporting competition within Australia's concentrated banking sector," said Robert Feeney (pictured right), partner at EY Parthenon. "They operate predominantly in the home lending space which delivers competitive pricing and meaningful savings to borrowers."
Several mutual lenders direct their services towards specific professions. Teachers Mutual Bank applies credit assessment criteria that account for salary packaging and casual employment, offering a more tailored evaluation of non-standard income. Unity Bank's Essential Worker Home Loans are issued predominantly to teachers (33%), nurses (22%), and paramedics (10%). Regional mutual banks similarly draw on local expertise to facilitate lending on properties that may not meet the criteria of larger institutions.
The sector contributed approximately $2.6 billion to the Australian economy in the past year through wages, taxes, and reinvested profits, with those returns remaining entirely within Australia rather than flowing to offshore shareholders.
"That $2.6 billion represents real jobs and local investment," Lawrence said. "When you choose a mutual bank, your money doesn't go to offshore shareholders – it stays right here in Australia to build up your own community."
Despite these advantages, awareness of the mutual model remains limited. A recent survey found that 74% of Australians do not know what customer-owned banking means. The report noted that 42% of Australians identify rates and pricing as the primary differentiator for customer-owned banks.
"Our sector is known for its people-first approach," Lawrence added. "They treat you as more than just a number, ensuring that genuine care and community focus sit at the heart of every interaction."
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