Australia’s lending landscape is shifting in 2025, with business lending surging ahead of residential borrowing for the first time in years, even as major banks and first-time homebuyers navigate a complex and competitive environment. Recent figures and industry insights reveal a sector in transition, where opportunity, caution, and lessons learned are shaping the future of finance across the country.
According to the latest Broker Pulse: Commercial lending report from Agile Market Intelligence, business lending in the year to June 2025 jumped by a remarkable 9.2 percent, reaching a total of $1.14 trillion. This outpaced residential lending, which grew by 5.6 percent to $2.34 trillion over the same period. The gap between the growth rates of business and residential lending is now the widest it has been since September 2022—a statistic that speaks volumes about the changing priorities in the lending sector.
Michael Johnson, director at Agile Market Intelligence, sees this as a sign of renewed optimism among Australian businesses. "There is now a contrast in behaviour, households are being cautious, while businesses are leaning in. For lenders, that means the growth story is shifting away from mortgages and toward business finance," Johnson told Agile Market Intelligence. The steady uptick in business lending since late 2023, following a period of subdued activity, underscores this newfound resilience in the corporate sector.
This trend is having a ripple effect on mortgage brokers, who are increasingly diversifying their services. According to a recent study by the Mortgage and Finance Association of Australia (MFAA), as of March 2025, 31.54 percent of mortgage brokers are also writing commercial loans—a rise from 30.66 percent in March 2024. Johnson notes, "Commercial lending has become a core part of broker operations by August 25, 2025. What was once an optional add-on is now a standard part of a diversified portfolio." He further emphasized, "Commercial capability is becoming a baseline expectation. By expanding your product set, it positions you to become relevant to the SME market."
While business lending is on the rise, the residential mortgage market is experiencing its own set of challenges and transformations. Bendigo Bank, Australia’s seventh-largest mortgage lender, recently reported a 7.6 percent increase in residential lending to $66.6 billion during its 2024 financial year, with most of the growth centered on owner-occupier mortgages and a modest uptick in investor loans. However, total lending at the bank only increased by 6.3 percent, as softer business and agribusiness lending weighed on the overall figure.
The bank’s reliance on residential mortgages remains pronounced, but the way customers are accessing these loans is changing. Broker-introduced lending fell from 51 percent to 46 percent of the book in the second half of FY2024, while proprietary lending through Bendigo Bank’s own channels rose from 30 percent to 38 percent. Digital mortgages filled the gap, with the bank’s retail channel delivering its highest level of settlements since 2019. The introduction of the Bendigo Lending Platform, designed to simplify the process for customers across broker and digital channels, has played a key role in this shift.
Despite these operational successes, Bendigo Bank ended the year with a $97.1 million loss, attributed to a significant goodwill impairment. Cash earnings were also down 8.4 percent to $514.6 million. Richard Fennell, the bank’s managing director and chief executive, addressed these results directly: "The full year results we present today demonstrate our balanced approach in a challenging and competitive environment." He noted that the second half of FY2025 brought "more moderate growth and stable margin," a contrast to the first half, when surging demand for the bank’s products put pressure on margins. Fennell also pointed out that expenses were higher due to planned investment spend, reflecting Bendigo Bank’s commitment to digital transformation and customer service improvements.
For Australian consumers, particularly first-time homebuyers, the complexities of the mortgage market are becoming more apparent. The latest Mortgage Choice Home Loan Report, based on a survey of 1,000 Australians, found that one in three borrowers took five years or more to save their home loan deposit—a sobering statistic for those hoping to enter the property market quickly. Even after this long wait, many borrowers are left with regrets: 57 percent wish they had done more research before choosing their first home loan, and 62 percent suspect they missed out on a better deal.
The most common mistakes? Assuming all home loans are basically the same (18 percent), focusing too much on interest rates (18 percent), and not considering how their needs might change in the future (18 percent). Anthony Waldron, CEO of Mortgage Choice, offers some straightforward advice: "Mortgage brokers tell me that many first time buyers will wait until they’ve found the property they want to buy to start looking at their home loan options, but that can lead to rushed decisions." Instead, Waldron recommends getting advice while building your deposit, understanding your borrowing power—including savings, cash gifts, government grants, and investment equity—and considering the full range of loan products and features.
Waldron also highlights the importance of choosing between variable and fixed rate loans as part of long-term financial planning. He urges borrowers to factor their home loan into their overall buying plan to avoid emotional and rushed decisions, a sentiment echoed by many in the industry as buyers face rising property prices and shifting lending criteria.
The evolving lending market is creating both opportunities and challenges for brokers, banks, and borrowers alike. As business lending surges and brokers diversify, financial institutions like Bendigo Bank are adapting to digital trends and changing customer behaviors. Meanwhile, first-time homebuyers are learning the hard way that diligence, preparation, and professional advice are more important than ever in securing the right mortgage.
With the lending landscape in flux, Australians are being called to adapt—whether by embracing new business finance opportunities, refining their approach to home loans, or leveraging technology to simplify complex processes. The numbers speak for themselves: growth is shifting, expectations are evolving, and those who move quickly and wisely may find themselves best positioned for success in 2025’s dynamic market.
