ANZ and Westpac Flag Mortgage Slowdown — What Borrowers Turned Away by Big Banks Need to Know

Australia's Major Banks Are Pulling Back on Mortgages — What This Means for Borrowers

Australia's two major lenders ANZ and Westpac have separately signalled weaker housing credit growth ahead. ANZ is bracing for a mortgage slowdown linked to the federal government's proposed tax changes, while Westpac recorded a measurable slip in loan demand. For borrowers who rely on major banks, this shift has real consequences — especially if your income does not fit a standard payslip model.

Why the Big Banks Are Slowing Down

The proximate cause is the government's 2026–27 Budget, which includes proposed changes to negative gearing and investor tax treatment. As these measures work through the Senate, major banks are pre-emptively tightening credit policy.

At the same time, the RBA's cash rate remains at 4.35% (effective May 2026) — a level that is already squeezing household budgets. The combination of elevated rates and pending tax reform has caused both ANZ and Westpac to revise their growth expectations downward.

For borrowers, this translates into:

• Stricter income verification across all loan types
• Reduced borrowing capacity for investment properties
• Longer processing times as risk teams apply new assessment criteria
• Higher bar for self-employed applicants who cannot produce standard PAYG documentation

The Non-Bank Window Is Opening

Non-bank lenders are not subject to the same APRA-mandated serviceability buffers applied to Authorised Deposit-taking Institutions (ADIs). This structural difference creates meaningful flexibility for borrowers who cannot satisfy major bank criteria.

Specifically, non-bank Alt Doc loans allow:

• Approval based on 6–12 months of BAS statements, business bank statements, or an accountant's letter
• No requirement for two years of full tax returns
• LVR up to 80% for residential properties and 75% for commercial
• Assessment of actual demonstrated income, not hypothetical post-reform scenarios

As APRA data consistently shows, non-bank lenders now account for a growing share of mortgage settlements — a trend accelerated by each period of major bank caution.

What Self-Employed Borrowers Should Do Now

If your major bank application has stalled, or your broker has flagged tightening standards, here are practical next steps:

1. Request a formal decline letter — this is typically required to progress a non-bank application
2. Gather your BAS statements — 6 to 12 months of quarterly BAS lodgements are the primary income evidence for Alt Doc loans
3. Prepare your business bank statements — transaction history supports income verification alongside BAS
4. Speak to a broker with non-bank panel access — not all brokers write non-bank loans; ensure yours does

MPFG Capital offers Alt Doc solutions specifically designed for self-employed Australians and small business owners who cannot meet standard bank income documentation requirements. With over $700 million in settled loans and more than $20 million placed per month, MPFG has the experience to assess complex and variable income profiles.

Frequently Asked Questions

Can I get a home loan from a non-bank lender if ANZ or Westpac declined me?

Yes. Non-bank lenders assess applications independently and use different income evidence. A major bank decline does not automatically disqualify you from a non-bank loan.

Do non-bank lenders have higher interest rates?

Non-bank loans may carry a slightly higher rate than the lowest major bank offerings, but the rate difference is often smaller than borrowers expect — and accessing the finance at all is the first requirement.

How quickly can a non-bank loan settle?

Conditional approval can often be obtained within 2–5 business days for well-prepared applications, with settlement typically within 2–4 weeks.

This article is general financial information only. It does not constitute financial advice. Loan approval depends on individual circumstances. Speak to a licensed credit adviser before making a financial decision.