Nano Digital Home Loans has suspended new home loan applications amid soaring funding costs, spoiling the lender's future growth plans. 

“Nano can confirm it has paused taking new applications in its direct-to-consumer mortgage business,” a spokesman said.

“The decision was made in the ordinary course of business as we wait for funding costs and credit spreads to normalise.”

As non-banks are not Authorised Deposit-taking Institutions (ADIs) they have to rely on sources of funding other than customer deposits to fuel their operations, such as mortgage securities, which have become increasingly expensive.

Currently non-banks are having to pay around 1.50% to 1.70% on top of the one-month Bank Bill Swap Rate (BBSW - currently around 2.70%) - which is the base interest rate - to investors of the safest mortgage pools.

This means many lenders would lose money on new loans written as their wholesale funding costs outweigh the interest rates received from new business i.e. the spread.

Previously Nano said it planned to launch its first mortgage bond in early 2023 after it amassed $550 million in mortgages in the first year of operation.

Rising interest rates and increased market volatility have concerned investors of non-bank lenders, thus making fundraising more difficult.

James Austin, CFO of non-bank lender Firstmac, said new fintech lenders have struggled recently simply due to unfortunate timing.

“The past three to five years has seen a number of new entrants in the non-bank and neobank sectors with many initially thriving, particularly over the past two years as the market was awash with liquidity,” Mr Austin told

“More recently, central banks have been actively reducing liquidity in the market through aggressive interest rate hikes.

“This has placed pressure on both the availability of funding and the cost of that funding.

“This environment is particularly difficult for smaller lenders as they have fewer funding levers available to them.”

In order for non-bank lenders to push through this tough time, Mr Austin said more capital will be needed to support ongoing operations.

This comes after Firstmac settled a $1.76 billion residential mortgage-backed security (RMBS) on Thursday, with the top tranche paying 153 basis points above the one-month BBSW. 

Will we see more non-banks struggle in the coming months?

According to Mr Austin, it’s difficult to know whether any other smaller, newer non-banks will close their doors until the central bank reaches its targets.

“Will we see more non-banks cease originations? That really depends on how long it takes for central banks to arrive at peak interest rates and how much damage is done to the economy in the process of bringing inflation under control,” he explained.

Currently, the RBA's cash rate stands at 2.60% and many bank economists expect this to reach up to 3.60% by early 2023.

Earlier this week, AMP Bank launched its 10-minute digital home loan in partnership with Nano.

The digital mortgage, which makes the refinancing process simpler and faster, will not be affected by Nano’s suspension on new home loans.

AMP's digital home loan is initially for customers looking to refinance an existing home loan with another lender to the AMP Essential Home Loan. 

The offer will extend to new loans in 2023.

In the interests of full disclosure, is an associate of Firstmac.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
Featured 4.6 Star Customer Ratings
  • No monthly or ongoing fees
  • Unlimited free redraw
  • No application fee
5.99% p.a.
5.90% p.a.
Principal & Interest
Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.09% p.a.
6.11% p.a.
Principal & Interest
Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Image by Kaique Rocha via Pexels

Ready, Set, Buy!

Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!

With bonus Q&A sheet and Crossword!

By subscribing you agree to our privacy policy