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Major and mutual banks recorded greater risk appetites than non-banks in 2025, according to a recent PEXA report.
The loans provided at these lenders were found to have higher loan-to-value ratios (LVRs) and had a larger share of mortgages requiring LMI.
PEXA said this confirms the major banks are a better option for first home buyers looking to purchase property with the assistance of LMI waivers.
The data revealed that in NSW, 59.4 per cent of the major banks’ mortgages required LMI. This dropped to 35.5 per cent among the majors’ subsidiaries and 23.5 per cent among non-banks.
Mutual banks recorded similar numbers to the majors, with 57.7 per cent of mortgages requiring LMI in NSW.
In Victoria, 65.1 per cent of the major banks’ mortgages required LMI. This dropped to 20.2 per cent among non-banks.
The trend continued in Queensland, with 60.9 per cent of loans at majors requiring LMI, dropping to 22.9 per cent at non-banks.
Mutuals have the largest share of loans with LVRs of 95 per cent, with 27.8 per cent of mortgages fitting this category.
This fell to 21.9 per cent among the majors, 11 per cent among the majors’ subsidiaries, and 4.3 per cent at non-banks.
With an LVR of 80 per cent, non-banks took the lead, with 36.14 per cent of loans at this threshold.
Major bank subsidiaries followed at 30.8 per cent, major banks at 20.4 per cent, and mutuals at 16.3 per cent.
LMI has come under the spotlight as updated policies aim to ease the burden for first home buyers.
The Labor Party announced a revision to the First Home Buyer Guarantee (FHBG) initiative through enabling all first home buyers to purchase a property with a 5 per cent deposit without the need to pay for lenders mortgage insurance (LMI).
NAB also updated its LMI waiver policy back in March that allowed those working in certain professional services and medical industries the ability to avoid paying LMI without having a 20 per cent deposit.
Helia launched a targeted LMI campaign in March titled “LMI Lets Me In” to reframe LMI with mortgage brokers by demonstrating the value of LMI to various segments of home buyers.
According to Helia, while many brokers have recognised the value of LMI in regard to enabling home ownership, it is still viewed as a “last resort” or an additional cost by some. The campaign aims to dispel these misconceptions and present LMI as a method that lets brokers help more clients into the property market.
The chokehold major banks have on loans requiring LMI has kept market share strong.
According to the data, the total residential assets at the major banks are:
- CBA: $1.12 trillion
- Westpac: $1.06 trillion
- NAB: $894 billion
- ANZ: $756 billion
Other trailing banks include Macquarie ($283 billion), BOQ ($117 billion), Bendigo and Adelaide ($116 billion), ING ($107 billion), and Suncorp ($100 billion).
People First Bank leads the mutuals with total residential assets of $27 billion.
Major banks and their subsidiaries win around two-thirds of residential new loans.
Despite the dominance of the major banks in the residential space, non-banks are closing the gap.
Major banks saw loan settlements climb 3.9 per cent from FY24 to FY25. Meanwhile, non-banks grew 25.3 per cent in the same period.
[Related: Helia launches targeted LMI campaign]
