Compare home loans from customer-owned banks

Everyone's heard of the big four banks, and the likes of ING, Macquarie, and Bendigo Bank. But have you ever heard of Coastline? First Option? Dnister?

These are a few of Australia's plethora of customer-owned banks, also known as mutual banks. And just because you haven't heard of them doesn't mean you should write them off as your potential lender.

Customer-owned banks can punch well above their weight when it comes to offering competitive home loans.

What is a customer-owned bank?

Customer-owned banks are ADIs (authorised deposit-taking institutions) that are owned and operated with the sole purpose of providing banking services to members - their customers - rather than generating a profit. They aren't publicly listed on the ASX, but they do have shareholders, that is, everyone who is a customer.

Many make a profit with the intention of reinvesting it either back into the bank itself or into the community, rather than divesting it as dividends to external shareholders or lining executives' pockets with huge bonuses.

In terms of product offerings, there's no great difference between mutual banks and retail banks - they can all offer home loans, credit cards, term deposit products, and more.

Customer-owned banks may be small but many fill important gaps in the banking landscape, particularly in regional areas.

According to joint research between KPMG and the Customer-Owned Banking Association (COBA) in 2023, customer-owned banks make up 3.5% of the value of overall banking assets, yet account for 18% of branches in Australia. In the regions, that presence is more than 20%. They also accounted for 5.6% of mortgage lending.

Collectively, customer-owned banks are considered the 'fifth pillar' of Australian banking, holding a combined $163 billion in assets (as at October 2024).

According to Roy Morgan research from 2024, customer-owned banks enjoy an 89.5% customer satisfaction rating compared to 75.4% for the major banks.

COBA CEO Michael Lawrence said the figures reflect the distinct alternative customer-owned banks offer compared to investor-owned institutions.

"The customer-owned model allows mutual banks and credit unions to prioritise reinvesting profits back into customers and communities rather than maximising shareholder returns," he said.

"This means they can make decisions that genuinely benefit their customers, such as offering competitive rates, better local service, and reinvesting into communities."

Who are the customer-owned banks?

COBA has 55 member institutions - from large customer-owned banks that operate nationally, to smaller credit unions dedicated to serving their local communities.

The Australian Prudential Regulation Authority (APRA) regularly publishes data into the size and scale of Australia's banks. As of January 2025, the largest customer-owned banks, in terms of assets, are:

1. People First Bank - $27.352 bn

2. Newcastle Greater Mutual - $24.857 bn

3. Great Southern Bank - $23.868 bn

4. Beyond Bank - $14.371 bn

5. Bank Australia - $13.754 bn

6. Teachers Mutual - $13.060 bn

7. P&N Bank - $10.328 bn

8. IMB - $9.907 bn

9. Qudos Bank - $6.461 bn

10. Defence Bank - $4.471 bn

1. People First Bank

People First Bank was formed through the merger of People's Choice and Heritage Bank in March 2023.

People's Choice began as an Adelaide-based credit union with branches in South Australia, Northern Territory and Victoria while its merger partner Heritage is one of Australia's oldest banks, dating back to 1875 and based in Toowoomba, Queensland.

Combined, People's First has more than 700,000 members, more than 90 branches, and around 1,900 employees including an Australian-based call centre.

As at February 2025, the bank operates dual head offices in Adelaide and Toowoomba and is working to bring together its products, services, and technology under a single brand.

2. Newcastle Greater Mutual

The Hunter-based institutions Newcastle Permanent and Greater Bank also merged in March 2023, continuing to operate both retail banking brands.

By itself, Newcastle Permanent was the second-largest customer-owned bank in Australia, touting itself as an alternative to the big banks.

Greater Bank began as the Newcastle and Hunter River Public Service Starr-Bowkett Building Co-operative Society Limited. In 2016, it changed its name to the catchier Greater Bank.

Together, the Newcastle Greater Mutual Group has more than 620,000 customers and a workforce of around 1,600.

3. Great Southern Bank

Great Southern Bank changed its name from CUA (formerly Credit Union Australia) in 2021.

Its origins date back to 1946, starting with a meagre 180 members, growing through the merger of more than 170 separate credit unions over the ensuing years.

Great Southern currently has branches predominantly on the east coast of Australia and a Melbourne-based call centre servicing more than 400,000 members.

4. Beyond Bank

Beyond Bank is headquartered in Adelaide, formed through the merger of credit unions and institutions, tracing its beginnings to more than 60 years ago.

Beyond Bank has around 280,000 customers, 40+ branches, and a national Australian-based call centre with a commitment to ethical and sustainable lending and business practices.

5. Bank Australia

Bank Australia was first established in 1957 as CSIRO Co-operative Credit Society, merging with 72 other credit unions and cooperative banks during its history before rebranding as Bank Australia in 2015.

As a 'responsible lender', Bank Australia does not lend to industries operating in:

• Fossil Fuels

• Live exports

• Gambling

• Intensive animal farming

• Weapons

• Tobacco

It is also one of the more prolific lenders in the green home loan space.

6. Teachers Mutual Bank

Based in Homebush, NSW, Teachers Mutual Bank was created in 1966 "by teachers for teachers" as Teachers Credit Union. It's now available to the wider public and has more than 230,000 members across the country.

It also owns Firefighters Mutual Bank, Health Professionals Bank, UniBank, and Hiver Bank and is committed to community and ethical investment, championing sustainability and social responsibility.

7. P&N Bank

P&N Bank, based in Perth, is the only West Australian-based bank in the top 10.

In case you're wondering, P&N stands for 'police and nurses'. The bank has its roots in the merger of the WA Police Credit Society and the Nurses Credit Society in 1990 to form Police & Nurses Credit Society.

It was rebranded P&N Bank in March 2013 when it became a mutual bank and has since merged with Coffs Harbour-based BCU Bank which retains its own brand name in New South Wales and southeast Queensland.

8. IMB

Based in Wollongong, IMB was established in 1880 as Illawarra Mutual Building Society with the express purpose of "enabling people to become their own landlords".

IMB has almost 217,000 members and has a branch network in the Illawarra, Sydney, NSW South Coast, the ACT, and Melbourne.

It can also boast being named one of the World's Best Banks by Forbes financial magazine in 2020.

9. Qudos Bank

Qudos Bank had its origins in providing banking services to Qantas staff. It was established in 1959 as the Qantas Staff Cooperative Credit Union Limited.

It changed its name to Qudos Bank in 2016 after Qantas reportedly asked the organisation to cease using its company name and similar branding.

More recently, Qudos is planning to merge with Bank Australia by mid-2025 although both banks will retain their brand names.

10. Defence Bank

Defence Bank (formerly known as Defence Force Credit Union) has been in operation since 1975. It provides banking products and services to serving and former Australian Defence Force members and "their supporters".

Defence Bank says its products and services are tailored to meet the specific needs of ADF members while remaining competitive enough for all Australians who support the Defence community.

The bank offers home loans subsidised by the Defence Home Ownership Assistance Scheme, which is designed to assist current and former ADF members and their families to achieve home ownership.

What home loans do customer-owned banks offer?

Most customer-owned banks offer the full range of products and services that larger retail banks offer, including:

1. Owner-occupier home loans

2. Refinance home loans

3. Guarantor home loans

4. Investment home loans

5. Low-doc home loans

6. Construction loans

7. Bridging loans

8. Line of credit home loans

How do customer-owned banks' rates and fees compare to other lenders?

Among the thousands of home loan products on the market, customer-owned banks can offer some great value home loans with low interest rates and fees. But just because they're not driven by providing juicy shareholder returns, it doesn't mean that customer-owned banks will automatically offer the best rates and home loan deals on the market.

Be sure to research all types of lenders to ensure you get the home loan with the best rate and features to suit your individual needs. Other types of lenders include:

• Non-bank lenders: Non-bank lenders are financial organisations that don't hold an ADI license, meaning they can't offer deposit products such as savings accounts, transaction accounts or term deposits, but can still offer lending products.

• The big four banks: The big four banks - ANZ, Commonwealth Bank, NAB and Westpac - account for around three-quarters of the home loan market in Australia. It's worth noting some digital-only banks, such as Ubank and Unloan, operate under the umbrella of larger banks (respectively NAB and Commonwealth Bank).

• Retail banks: Some of the larger retail banks outside of the big four also have significant loan books and assets under management, including Macquarie Bank, Bendigo and Adelaide Bank, and Bank of Queensland.

Customer-owned bank home loans - pros and cons

It can be hard to find perfection in the financial sector. Here are the various pros and cons of banking with a customer-owned institution:

Pros

• Customer-owned banks can offer competitive interest rates and low fees

• They have the same consumer protections as the big banks

• They can represent and service a local area

• They generally offer strong customer service and online capabilities

• They have higher average customer satisfaction ratings than larger banks

• You become a part-owner in the bank and can have a say in major company decisions

Cons

• It can be harder to get approved for a loan - their smaller size means some mutual banks only take customers with good credit ratings and relatively large deposits

• If you can't meet certain conditions, you might have to pay a much higher interest rate

• Smaller lenders can have fewer loan options

• Some small customer-owned banks may concentrate their resources in branch banking with sub-par online offerings

Savings.com.au's two cents

While the big four banks have lost some share in the home loan market in more recent times, they still collectively hold about three-quarters of all home loans written by Australian banks in 2024.

Customer-owned banks exist to provide banking products and services to their members, not to deliver profits to outside shareholders, and can be well positioned to offer competitive interest rates and loan features.

With the rise and rise of digital and online banking, you don't need to live in a region where a customer bank is based or be part of its traditional occupational base to take advantage of the products and services it offers.

A mortgage broker may be able to help you to navigate the expansive home lending market to find the best home loan for your needs. Make sure you take into account what the customer-owned banking sector has to offer.