Brokers Turning to Non-Banks as Serviceability Squeeze Tightens

Non-Bank Mortgages Climb as Bank Buffers Bite

Australian mortgage brokers are routing a growing share of clients to non-bank lenders as rising interest rates and conservative serviceability assessments shut more borrowers out of the major banks, industry publication The Adviser reported on 15 April 2026.

The RBA's cash rate remains at 4.10% (effective 18 March 2026), but the real constraint for many borrowers is not the rate itself — it is the 3% serviceability buffer that authorised deposit-taking institutions (ADIs) must apply on top of the loan rate under APRA's prudential standards. For a borrower seeking a loan at 6.5%, the bank tests affordability at 9.5% — a threshold that excludes a significant segment of self-employed, variable-income, and recently self-employed borrowers.

Why Non-Banks Are Gaining Ground

Non-bank lenders are not subject to APRA's prudential framework in the same way as ADIs. Many apply their own serviceability assessments that better reflect a borrower's actual financial position rather than a stress-tested worst-case scenario. This is particularly relevant for:

• Self-employed borrowers with legitimate income that doesn't appear cleanly on a tax return
• Alt Doc applicants who can verify income through BAS statements, accountant letters, or business bank statements
• New migrants and PR holders whose Australian credit history is limited but whose income is stable
• Borrowers with irregular income such as commission-based professionals and seasonal business owners

The MPFG Capital Perspective

At MPFG Capital, we have observed this trend directly: enquiries from clients who have been declined by one or more major banks have increased significantly in early 2026. The serviceability buffer isn't going away — APRA has shown no signs of softening its stance — which means non-bank solutions will remain essential for a growing cohort of creditworthy borrowers.

Our Alt Doc loan range, including MPFG Bright and MPFG Flex, is specifically designed for borrowers in this situation. We assess income using real-world documentation rather than a single, narrow definition of provable income.

What Brokers Are Saying

Brokers interviewed by The Adviser noted that the non-bank share of their settlement volumes has been growing steadily. Many borrowers now come pre-aware that major banks may not be the right fit for complex income situations.

This normalisation of non-bank lending is significant. For years, being referred to a non-bank carried a stigma; today it is increasingly the smart first move for complex borrower profiles.

Key Takeaways

• Bank serviceability buffers (3% above assessed rate) remain a major approval barrier
• Non-bank lenders are gaining broker referrals as a result
• Alt Doc and flexible income verification products are in growing demand
• MPFG Capital's product range is designed to serve these borrowers effectively

This article is for informational purposes only and does not constitute financial advice. Loan eligibility depends on individual circumstances. Please speak with a qualified mortgage broker.