ABA CEO Simon Birmingham on the Savings Tip Jar podcast

E&OE
Podcast Interview
The Savings Tip Jar
18 February 2026.

Topics: Mortgage refinancing, savings accounts.

Dominic Beattie (Host): Welcome to this week’s Dollar Dialog, and today we’re talking refinancing, with new data dropping from the ABS last week, showing that a record 640,000 Australian mortgages were refinanced through 2025, which is up 20% on the previous year. So, what’s going on? Why are so many Aussies refinancing their mortgages? Well, let’s see if we can find out with the Australian Banking Association CEO Simon Birmingham, who joins us now. G’day, Simon, welcome to the Savings Tip Jar.

Simon Birmingham (Guest): It’s great to be with you and thanks for having me.

Brooke Cooper (Host): Thanks for coming on, Simon. Yeah, it’s been a really big year for mortgage refinancing and there’s so much going on in the banking space. So really keen to pick your brains today. But I guess before we jump into the meaty stuff, do you have a savings tip to share with us

Simon Birmingham: In our household every month, 15th of the month, we benchmark where the bank accounts are at, actually how we’ve progressed and that gives us a sense. Are we actually above, below, where we want to be, and if we’re not meeting those sorts of targets, gives a reason to go back and try to see why and look at different things. Everybody’s different, but for us, just keeping that track and having a little spreadsheet very helpful.

Dominic Beattie: Nice. Sounds like a typical banker thing to do. Looking at the old school stuff, the old spreadsheet, which, which I, myself still rely upon as well. So, yeah, getting into this refinance data, you know this jump actually surprises me, given we had three rate cuts last year, so I would have thought a lot of Aussies would just be happy letting the repayments go down with the rate cuts and maybe not doing the hard work and going to refinance to another deal. So what do you think is driving this?

Simon Birmingham: We’re seeing a really competitive environment, so I think there’s a combination of a few things driving it, consumer behaviour. And indeed we do see, particularly with younger generations of consumers, not so much of that traditional absolute loyalty to the stick with one bank for life approach. So they’re willing to shop around. And indeed, on the bank side, we’re seeing many different approaches to connecting with customers offering different products, and indeed, that has seen some close to 700,000 people refinance their mortgages – up 20% from the previous year, and most of those, nearly two thirds of them, refinancing to a new lender, which really shows that Australians are shopping around and trying to find the deal that best suits them and their circumstances.

Brooke Cooper: Absolutely. Now, Simon, just looking at the landscape in Australia, we’ve got more than 100 lenders across the country, yet around 80% of the home loan market and the banking space in general is concentrated with the big four. Just quickly. Why do you think that is in Australia?

Simon Birmingham: A lot of historic factors attached to some of that, in terms of the way people used to bank. But we are certainly seeing as more people choose digital only banking solutions, that there is some greater diversity of choice, of course, for responding and investing heavily in their digital solutions as well. And there’s a trust and stability that can come with that scale as well as scale advantages sometimes in the products that they may seek to offer. So lots of different factors there, but the growth in mortgage broker lending as well means that more choices are more easily available to people. But again, banks have responded and are trying to win back some of that broker market. Sometimes it will pay to speak direct to some banks to be able to get the best possible deal.

Dominic Beattie: So just diving bit deeper into this, these lending figures, Simon, one thing that stood out to me is it looks like investor lending is picking up rapidly. And it looks like about, I think it was a 30% increase in investor lending growth through 2025. Now this is three times the 10% speed limit that that APRA had on investor lending growth back in 2014 to I think it’s 2018 when they wrapped it up. So, in light of that, do you think we could see a cap like that reintroduced if lender investor lending activity continues at this pace.

Simon Birmingham: Well, it’s up to APRA in terms of the independent decisions they make, but they have already taken steps around looking at the scale of lending relative to debt to income ratios, and signaled very much that they are looking closely in this space and the need for banks to ensure they are acting responsibly, but critically, the message from APRA as well is that those debt to income ratios they put in place and those steps they’ve already taken are not ones that banks are breaching or even close to breaching at present in the overwhelming majority of cases, but they are sending a signal into the market and also ensuring that financially, banks continue to operate in a safe and secure way to make sure that people are able to meet their lending obligations.

Brooke Cooper: Thanks, Simon. My next question we touched on it a little bit earlier about brokers and digital channels and new brands popping up. I wanted. To get your opinion on just a conversation that I’ve seen popping up a lot, I know last year S and P Global Ratings Report called banks relationships to brokers, a love hate relationship. And we’ve seen Commbank is quite open about how their broker written loans are about 20 to 30% less profitable than their proprietary or direct to bank lending. And as you mentioned before, we’ve seen the introduction of special offers and categories specifically to borrowers who go directly to the banks rather than go through brokers, like, I think Commbank’s current lowest variable rate is advertised only to its direct mortgage channel. It’s got its un loan brand. There’s similar things happening at ANZ and Westpac and the likes, but brokers are still behind close to 80% of new mortgages written. I think it’s 77% at last count. Does that uptick in broker lending concern the banking industry? And do you think that big banks’ moves to secure more proprietary lending is working?

Simon Birmingham: Well, many of those, of course, go to individual commercial decisions of the banks. What we have seen across the system is that net interest margins that the banks operate with have narrowed over a period of time. That is driven by different factors. There’s fierce competition for deposits, and just as people should shop around in their lending products, there’s opportunity to shop around for deposits as well and to get the best possible deal as to where you are saving your money. But competition on both those sides has seen interest margins tighten, and of course, brokers are part of that.

It’s good and healthy for competition, though, for banks, in a sense, to fight back and to say, well, actually, our direct channels are important. If we can cut out the middle man, there may be a win-win opportunity that gives consumers a better deal, but also a better bottom line. And healthy strong banks are important for our economy. They’re important for people’s retirement savings, superannuation savings, and so making sure that they are in the strongest possible position to give the best deals, but also strong, solid returns to shareholders is ultimately in everyone’s best interests.

Brooke Cooper: It’s interesting that you mentioned the deposit space, Simon, because, yeah, I often have a bone to pick with the banks on the bonus savings accounts that you know, obviously they exploded in popularity quite recently. You know, those ones where you have to jump through hoops in order to earn the top rate of any rate of interest. And it seemed like banks saw them as an opportunity to lower their interest costs. You know, their interest payments out to save us. Because, you know, a lot of people weren’t meeting those conditions each month and weren’t earning that top rate of interest. But now it seems like a lot of people are getting sick of having to jump through hoops. You know, I think I saw Westpac introduce a requirement to think you had to do 20 transactions in the month with the link transaction account to earn that top bonus rate of interest. So yeah, people are getting fed up, and they’re moving to the likes of Macquarie or AMP that are now offering a good, solid rate of interest, and maybe not the best on the market. But it doesn’t require those conditions. But another thing we’ve seen with the RBA rate hike, you know, I’ve seen a lot of banks passing on the hike onto the bonus element of the savings account rate, as opposed to the ongoing base rate. Don’t you think it’s a bit disingenuous from the banks?

Simon Birmingham: Well, I think, I mean, you’ve answered some of the question on the way through, that there are different products and different options, and it is where people need to shop around and also be aware of the terms and conditions attached to the different deposit or any account that you may have to make sure that it is the one best placed for you. The data shows that Australian banks paid out around $136 billion in interest payments last year, which is nearly three times greater than it was in the year before COVID. Obviously, COVID was massive disruption, and also saw interest rates plummet to near zero levels, and we’ve come back from that people, of course, looking at higher interest environment risks at present, but the amount of interest paid has gone up substantially as that competition for deposits has sharpened.

But it is critical that as those products are tailored to attract people in different circumstances now and to give rewards to them, that you look at what’s going to best benefit your circumstances and tailor and respond to that. And know, of course, that as consumers move, so too will the industry in that fierce competition to be able to bank your dollars, have your dollars invested in them, give them the capital benefits of that. But you need to be as a consumer, shopping around and looking for those best benefits.

Brooke Cooper: And last question we’ve got for you here, Simon, about 80% of indebted Aussie mortgage holders didn’t reduce their repayments after the 2025 rate cuts. And that’s from data from I think NAB and Commbank both released similar data, showing that was a pattern across both banks, both of those banks and I think ANZ, too, among the Big Four, don’t automatically reduce a person’s home loan repayments. When a rate cut comes into play, and that means that when rate hikes come into play, people are already paying above the minimum. And so maybe the RBA is rate hike is less effective. Do you think that is an argument that banks should move home loan variable, home loan interest rates in line with the RBA cash rate, to just make the RBAs decisions more effective for consumers against inflation?

Simon Birmingham: Well, again, it comes down, really, to the tension point between consumer choice and how that is applied. The benefit for individual Australians is that we do see around 80% who are ahead in their mortgage repayments. Indeed, around a third of Australians with mortgages are around two years ahead in their repayments, and indeed, I’m in one of those circumstances personally, where last year, as those interest rate cuts flowed through, I kept paying the same monthly amount, which means we’ve gotten a little further ahead in terms of our mortgage, that means it’s a bit easier when rates go back up, and can be of benefit to those households who are able to manage those circumstances.

Obviously, from the RBA’s perspective, they are trying to use one of the very few tools they have in the toolkit to deal in a monetary policy sense with higher inflation than they’d like, but a lot of that goes to expectations, behaviour and otherwise, and just because people may not see the hit to their monthly bottom line of always having to pay more as rates go back up, but perhaps their monthly payments aren’t because they didn’t change last year, they are still often very conscious of the fact they’re back to paying more in interest, less is going off of the principal, and that can drive itself behavioral changes in their consumption and other spending patterns without necessarily the need for that direct hit. So yes, it complicates things, perhaps from a very binary sense of the the RBA, but for consumers, it can offer benefits, and the signals are often still there anyway.

Dominic Beattie:

Yeah, certainly, that’s definitely a good position to be in when you’re so far ahead on your repayments, and your repayments a lot higher than the minimum that any rate hikes don’t actually change your monthly outgoings. Simon, Birmingham, thank you very much for your time on the Savings Tip Jar Podcast, really appreciated your insights today.

Simon Birmingham: Thanks, guys. My pleasure, anytime.

Ends