Its Deja Vu For Big Four Bank Investors As The Mortgage Wars Recommence With a Vengence!

Big Four Bank Investors may think they’ve seen the ‘Mortgage Wars’ all before and they’re no big deal. After all: Aren’t the banks always competing hard for borrowers whatever interest rates do? Yes, but the mortgage wars of 2022-23 were not called ‘wars’ for no reason. ANZ’s resurrection of cashback retention payments, Westpac’s latest fixed-rate salvo, and a rising-rate environment all suggest the sector is entering a new phase of the battle — one with more complex dynamics than the 2022–23 iteration.

Big Four Bank Investors Think They’ve Seen It Before, But They Have Not

Australia’s mortgage market is back in conflict, a fact marked by how ANZ has quietly resumed offering targeted retention payments of approximately A$2,000 to borrowers who have lodged discharge forms to refinance to another lender. This tactic is not new, but it was abandoned by the major banks in 2023 after it compressed margins and drew industry criticism. Westpac has simultaneously become the last of the Big Four to push fixed home loan rates above 6%, following two RBA cash rate hikes in 2026 with more likely to come.

The combination of higher rates, a refinancing wave, and the growing disruptive presence of Macquarie Bank creates a materially different competitive landscape to the last mortgage war. The financial implications for the Big Four are significant: cashbacks and below-market retention pricing are margin-destructive tools, and they are being deployed into a market where the threat from outside the oligopoly has never been more credible.

Mortgage “Wars”?

Australia’s Big Four — Commonwealth Bank (CBA), ANZ, NAB, and Westpac — collectively dominate the A$2.4tn housing loan market, but their grip has been loosening. The major banks broadly abandoned advertised cashback offers in 2023 after the combination of cheap Term Funding Facility (TFF) money expiring and a surge in refinancing activity compressed net interest margins (NIMs).

ANZ itself removed its A$2,000 refinance cashback for new customers in September 2024, retaining only a A$3,000 first-home buyer incentive. That decision looks to have been penny wise but pound foolish – data from the Australian Prudential Regulation Authority (APRA) showed ANZ’s mortgage market share fell from 13.58% to 13.5% in the 12 months to August 2025, even as the broader market grew 6.2%. Now, with two rate hikes already delivered in 2026 and Westpac forecasting three more, the banks are recalibrating once again.

What Has Happened

The Australian Financial Review reported last Friday (April 17) that ANZ has recommenced targeted retention payments to borrowers already partway through the discharge and refinancing process — specifically, those who have submitted formal paperwork to leave the bank. The payments are approximately A$2,000, accompanied by rate discounts that undercut competitor pricing by roughly 15–20 basis points and, in some cases, fee waivers. ANZ confirmed the practice, describing the offers as discretionary and dependent on individual circumstances.

Critically, these are not broad advertised cashbacks of the kind that characterised 2022–23. They are last-minute retention incentives directed at borrowers who have already decided to leave — a distinction that has inflamed brokers. Matt Turner of GSC Finance described the retention system as “flawed,” noting that banks “will only try when the discharge is lodged,” by which point brokers have completed 10–15 hours of work on a file. Daniel Kaminsky of Loans4Homes raised the prospect that if a bank is willing to spend thousands to keep a client, it should recognise the effort brokers contributed to that outcome.

Westpac’s contribution to the competitive environment arrived separately, though is no less consequential. On 2 April, the bank became the last of the Big Four to hike fixed home loan rates above 6%, lifting rates by up to 45 basis points to a lowest fixed rate of 6.14% for a two-year term. The move followed 63 lenders — including Macquarie, ING, and Bank of Queensland — doing the same in the 16 days following the March RBA decision.

Westpac’s economics team is now forecasting three further hikes in May, June, and August 2026, which would lift the cash rate to 4.85% — its highest since the GFC. Westpac also made a concurrent change to its variable rate communication policy: future changes will now take effect 10 days after an RBA decision, aligning home loan and deposit rate adjustments.

Is This 2022–23 Again?

The parallels are real, but the dynamics are importantly different. In 2022–23, cashbacks were broad and advertised — a blunt instrument used to attract refinancers at scale during a period of rapid rate-driven switching. NIMs initially expanded as banks repriced assets faster than liabilities, boosting net interest income by 13.8% in the first full year of tightening. But that tailwind quickly reversed as TFF funding expired, competition intensified, and cashbacks became a margin drag. By 2025, NIMs for the Big Four had recovered to just a 2 basis point gain on the year to 1.8%, with CBA leading at 2.04% and NAB trailing at 1.80%.

The 2026 iteration is more targeted and reactive, rather than proactive. ANZ is not running an advertised cashback campaign — it is deploying retention incentives at the point of maximum borrower commitment to leave. This suggests the bank has learned from 2023’s broad-stroke approach, attempting surgical intervention rather than system-wide margin sacrifice. However, the competitive pressure driving the behaviour is structurally more challenging than it was in 2022. Competition is no longer just internal to the Big Four.

The Dark Horse: Macquarie

Macquarie (ASX:MQG) is the factor that changes the strategic calculus most materially. In the 12 months to January 2026, Macquarie was responsible for 22.6% of the growth in Australian housing lending — more than three times its overall market share of approximately 6.9%. Its mortgage book reached A$160.8bn by November 2025, growing at 2.32% per month compared to CBA’s 0.76%.

On an annual basis, Macquarie’s book expanded nearly 24%, versus 6.5% at CBA, 5.5% at NAB, and just 3.9% at Westpac. Around 95% of Macquarie’s home loans are originated through brokers, compared to the Big Four’s greater reliance on proprietary channels — a distribution advantage that is growing as broker market share has reached a record 77% of all new residential mortgages.

Macquarie’s competitive edge is structural: competitive pricing, a clean digital platform, and a broker-first experience that has earned it the top position in MPA’s Brokers on Banks survey four years running. Unlike ANZ’s tactical cashback responses, Macquarie does not need to offer last-minute retention sweeteners because it rarely loses customers through the broker channel in the first instance. For ANZ, CBA CEO Matt Comyn has described Macquarie as a “formidable competitor” — an acknowledgment that the disruption is no longer peripheral.

The Financial Implications Of The Mortgage Wars and Outlook

The trajectory is concerning for Big Four margins. In the first half of 2025, lenders were already trimming rates ahead of RBA moves to protect market share, compressing spreads. A return to retention cashbacks — even targeted ones — adds further cost pressure. If Westpac’s rate forecasts prove accurate and the cash rate reaches 4.85%, a new wave of household stress and refinancing activity is plausible, which would intensify competition further. ANZ’s move is likely to prompt other majors to respond in kind, either matching retention incentives or accelerating proprietary lending channel investment to reduce broker dependency and reclaim margin.

The broader picture, however, is that this mortgage war does not end with cashbacks. The Big Four face a structural shift in distribution toward brokers and a credible institutional disruptor in Macquarie growing at system-beating pace. Cashbacks are a short-term lever; they do not address the underlying question of whether the Big Four’s current mortgage economics are sustainable in a market with 77% broker penetration, rising rate expectations, and a new competitor that has built its model precisely to exploit their weaknesses.