Compare home loans from customer-owned banks

Everyone’s heard of the big four banks, as well as the likes of ING, Macquarie, Bendigo Bank and so on. But have you ever heard of Coastline Credit Union? The Capricornian? Lithuanian Co-operative Credit Society “Talka” Limited?

No, those aren’t local rugby teams – they’re 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. 

On this page, you'll find out what customer-owned banks are, who the biggest ones are, what kinds of loans they offer, and how they compare to some of the other prominent banks in the market.

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 (i.e. customers) rather than generating a profit. They aren't publicly listed on the ASX, but they do have shareholders, which is everyone who is a customer of the bank.

Many make a profit with the intent on reinvesting profits either back into the bank itself or into the community, rather than providing dividends for thousands of shareholders and lining executives' pockets with huge bonuses.

In terms of products they can offer, there’s no real difference between mutual banks and retail banks – they can all offer home loans, credit cards, deposit products, and more. 

Customer-owned banks are small but mighty. According to joint research between KPMG and the Customer-Owned Banking Association (COBA), they make up 3.5% of the value of assets, yet 18% of branches in Australia. In the regions that presence is more than 20%. 

Collectively they are called the 'fifth pillar' of Australian banking, worth about $150 billion in assets altogether. 

According to Roy Morgan research from 2022, customer-owned banks enjoy a 91.6% customer satisfaction rating compared to 77.4% for the major banks.

“With growth rates like this it’s clear that word of our sector’s customer satisfaction scores, competitive interest rates and innovative services is spreading,” said Michael Lawrence, CEO of COBA.

“Australians want, and deserve, to be put first by their bank. Thankfully there’s an entire sector with a 150-year legacy of doing just that."

Who are the customer-owned banks? 

COBA has a list of its 58 member institutions here - from large customer-owned institutions that operate nationally, to tiny little coastal credit unions dedicated to serving the local township’s inhabitants.

The Australian Prudential Regulation Authority (APRA) regularly publishes data into the size and scale of Australia's banks. As of April 2023, the largest customer-owned banks are (in terms of assets):

1. Heritage & People's Choice - $26.715b
2. Newcastle Greater Mutual - $24.069b
3. Great Southern Bank - $21.798b
4. Bank Australia - $11.871b
5. Teachers Mutual - $10.773b
6. Beyond Bank - $10.671b
7. P&N Bank - $9.435b
8. IMB - $9.013b
9. Qudos Bank - $6.007b
10. Bank First - $4.285b

1. Heritage & People's Choice

In March 2023, Heritage Bank and People's Choice Credit Union merged.

The two continue to offer separate products and are yet to decide on an ongoing new name.

Based in Toowoomba, Queensland, Heritage Bank originally began as the Toowoomba Permanent Building Society in 1875. It changed its name to Heritage Bank in 2011 but remains one of the oldest financial institutions in Australia (still standing). 

People’s Choice Credit Union, or People’s Choice for short, has more than 390,000 members across Australia. It began in 1949 but became what it is today after the merger of Australian Central and Savings & Loans in December 2009.

Its headquarters are in Adelaide, and Roy Morgan named it the country’s best credit union in 2014, 2016, 2017 and 2018.

2. Newcastle Greater Mutual

In March 2023, Newcastle Permanent and Greater Bank - both Hunter-based institutions - merged.

Newcastle Permanent - or 'the Perm' as locals say - by itself was the second-largest customer-owned bank in Australia, and touts itself as an alternative to the big banks. It has over 325,000 customers and nearly 1,000 staff, and given the name, it is unsurprisingly based in Newcastle. 

Greater Bank began as the Newcastle and Hunter River Public Service Starr-Bowkett Building Co-operative Society Limited, or NHRPSSBBCSL as you might know it. It changed its name to Greater Bank in 2016, and today claims to have more than 270,000 customers. Greater Bank is also based in Newcastle NSW. 

3. Great Southern Bank

Founded in 1946, Great Southern Bank has grown to become the country’s largest customer-owned bank, offering financial and insurance products to over 600,000 Australians. Great Southern Bank is based in Brisbane and was named the “Most Innovative Mutual” by the Australian Banking Innovation Awards 2019. It changed its name from Credit Union Australia (CUA) in early 2021.

4. Bank Australia 

Bank Australia was first established in 1957 as CSIRO Co-operative Credit Society, before rebranding to Bank Australia in 2015. Over its history it has unified 72 credit unions, eventually becoming Australia’s first customer-owned bank as we know it.

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 providers in the green home loan space.

5. 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 everyone, and has over 200,000 members across the country, making it one of Australia’s largest mutual banks. 

It also owns Firefighters Mutual Bank, Health Professionals Bank and UniBank.

6. Beyond Bank 

Beyond Bank Australia, or just Beyond Bank, is headquartered in Adelaide. It became 100% customer-owned in 2013, and is comprised of other institutions such as My Credit Union, Country First Credit Union, Alliance One, Wagga Mutual Credit Union and more. 

Beyond Bank has over 240,000 customers, 40+ branches and a national Australian-based call centre. 

7. P&N Bank 

P&N Bank is the only West-Australian bank in the top 10, based in Perth. This makes it the largest bank-owned and managed in Western Australia. The P&N stands for police and nurses – it originally began in 1969, but the merger of Police Credit Society and the Nurses Credit Society led it to be named P&N Bank.

P&N Bank has over 160,000 customers.

8. IMB

Based in Wollongong, IMB was established way back in 1880 as Illawarra Mutual Building Society and is one of Australia’s largest mutuals. IMB has almost 210,000 members and a growing branch network in Illawarra, Sydney, NSW South Coast, the ACT and Melbourne.

9. Qudos Bank

Qudos Bank was originally founded out of providing banking services to Qantas staff. It was established in 1959 as the Qantas Staff Coopertive Credit Union Limited. 

Today its headquarters is in Mascot, Sydney - fitting, because Sydney Airport is right there. It also has branches in Sydney, Brisbane and Melbourne. 

10. Bank First

Victoria Teachers Limited, trading as Bank First, was first established in 1972 in Hawthorn Victoria. As the name implies it originally started as a way to provide banking services to teachers and educators. 

Today it has more than 110,000 customers, and boasts innovative products such as interest-upfront term deposits.

What home loans do customer-owned banks offer? 

Customer-owned banks are plentiful, as the data above shows, and the larger ones are able to offer home loans for all sorts of different circumstances: 

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 the customer-owned banks’ rates and fees compare to other lenders?

Customer-owned banks can offer some great value home loans with low interest rates and fees, but remember there are thousands and thousands of home loan products on the market. What you can see in the tables above may not tell the full picture – not all customer-owned bank home loans products will have rates as low as the ones displayed.  

Don’t automatically assume customer-owned banks offer the best rates on the market just because they say they do. It is possible that there are better rates out there, so broaden your search to include some of these other types of lenders too. These other types of lenders include: 

• Non-bank lenders: Non-bank lenders are financial institutions 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 home loans.
• The big four banks: The big four banks – ANZ, Commonwealth Bank, NAB and Westpac –  take up much of the home loan market in Australia. According to recent analysis of their loan books, the big four combined account for about 80% of the total mortgage market, and have almost $3.8 trillion in assets under management together.
• Retail banks: Some of the biggest retail banks outside of the big four also have billions and billions of loans and assets under management, such as the likes of ING, Macquarie Bank, Bendigo and Adelaide Bank, HSBC, AMP and more. 
• Neobanks: There’s a few fintech ‘digital’ or ‘neo’ banks that have emerged in the past few years, such as ubank and Judo Bank.

Customer-owned bank home loans – pros and cons 

No bank is perfect. Here are the various pros and cons of banking with a customer-owned institution: 

Pros

• Customer-owned banks can offer some competitive interest rates and low fees 
• They have the same consumer protections as the big banks
• They can represent a certain local area 
• They can have strong customer service with good online capabilities 
• They can have strong average customer satisfaction ratings
• You become a part owner in the bank and have a say in major company decisions 

Read more about the COBA code of practice here. 

Cons

• It can be harder to get approved – their smaller size means many mutual banks only take customers with good credit ratings and a strong deposit
• If you can’t meet these conditions, you might have to pay a much higher interest rate 
• Smaller lenders might have fewer loan options 
• The very small customer-owned banks might rely on branch banking with sub-par online offerings – mainly due to a lack of resources

Savings.com.au’s two cents 

The big four banks aren't the only lender out there that offer a range of home loan products. In other words, you aren't limited to choosing just from the big four banks' selection.

With customer-owned banking growing in popularity, and over 50 to pick from, now could be a good time to open a new home loan with one or refinance from your existing lender.

Consider consulting a mortgage broker too if you need help choosing the right home loan.

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