Housing inequity is not a new phenomenon; in many ways, inequity is the very reason the customer-owned banking sector was formed.
Today, the 47 mutual banks and credit unions that COBA represents continue to lead on practical solutions to help Australians achieve the dream of home ownership. 95 per cent of their lending is for home loans, with 80 per cent supporting owner-occupiers.
Against a backdrop of the country’s housing crisis, three institutions – Bank First, Bank of us, and Bank Australia – highlight how purpose-led, competitive lending and innovative community partnerships can help tackle the challenges.
Bank First: Championing essential workers
Bank First was established in 1972 by 48 teachers who wanted to solve the problem of access to banking for other teachers. Its first loan wasn’t a home loan – it was a rental bond for a teacher raising two children on her own. Today, Bank First is a bank for all Australians, but their profits are used to help teachers and nurses in Australia thrive, whether that’s while they are studying to become a nurse or a teacher, while they’re establishing their career, or facing challenges across the span of their life.
“Bank First’s core focus is on ensuring our members can access the right housing for them, in locations that are close to their work and community. As a member-owned bank, we offer a range of options and leverage all available policies and initiatives so we can support our members into housing faster,” Bank First CEO Michelle Bagnall said.
It is through this lens that Bank First has been collaborating with cooperative housing to help develop new and innovative solutions, to give essential workers quality housing in the locations where we need them. These models are being designed to complement traditional home ownership, private rental and social housing, not replace them.
The key to success will be partnership, and government, cooperative housing providers and purpose-led capital all have a role to play.
Bank First is investing in these potential solutions, not as a housing expert, but through the lens of capital and funding solutions – and with the sole purpose of making life better for nurses and teachers in Australia.
Ultimately, the bank’s strategy is driven by a focus on fairness rather than maximising margins.
“We’ve spent the last five years removing all unnecessary fees and charges and any non-interest income that’s unnecessary or off the book. We’ve removed any commissions and anything that is not in the best interest of the member. We tend to keep it simpler, but we are very focused on creating a sense of fairness in the pricing. We’re more willing to use the profit margin in service of a member,” Michelle explained.
Bank of us: Regional agility and shared equity
The sector’s positive impact is deeply felt in the regions, too. Tasmania’s only customer-owned bank, Bank of us, serves as the sole partner lender for MyHome, the Tasmanian Government’s shared equity program.
MyHome helps eligible Tasmanians build or buy a home, with the Government contributing up to 30 per cent of the purchase price for an existing home and 40 per cent for a new home. This effectively reduces the amount customers need to borrow and enables them to purchase a property with a deposit of just 2 per cent.
Since the program began in mid-2022, Bank of us has helped 3,000 Tasmanians into a home through MyHome.
“It’s a milestone we’re incredibly proud of. But what inspires us most are the individual stories behind that number, the people and families who now have the security of a place to call their own. Every one of those stories is a reminder of why MyHome matters and why we’re so proud to be part of it,” Bank of us CEO Paul Ranson said.
Of course, government-backed programs form just one part of the picture. As a locally based mutual bank, Bank of us brings local knowledge and individual judgement to lending decisions. That can be particularly important for regional borrowers or properties that may not fit neatly within the standardised lending models used by larger institutions.
These are not deemed as higher-risk loans. Often, they are simply more complex applications that benefit from individual assessment and a deeper understanding of the borrower, the property and the local market.
“One of the benefits for the smaller customer-owned banks is that we are able to move quite quickly in aligning lending policy and products. Because many of us work in those regional markets, that has put us in a great position to work with the Tasmanian government on their shared equity scheme and deliver real value to how you distribute that scheme in the market,” Paul explained.
That reflects one of the broader strengths of the customer-owned banking model. Without the same sales incentives as some larger financial institutions, customer-owned banks can take the time to understand individual circumstances and make lending decisions focused on achieving a responsible and sustainable outcome for the customer.
Bank Australia: Impact lending and inclusion
Bank Australia demonstrates how these values can be extended to support some of the most vulnerable members of society.
The mutual bank was one of the first financial institutions in the country to provide loans to community housing providers.
“Bank Australia has a strong track record of supporting affordable and accessible housing, and we believe everyone is entitled to live in an affordable home that meets their needs. Increasing access to affordable, secure and accessible homes is a top priority for us and an important issue for our customers,” said Tim Von Ess, Head of Impact Lending at Bank Australia.
Despite the inherent complexities, they embraced this challenge because it aligned with mutual banking values. Through their impact lending, they finance not-for-profits that build and manage homes for people struggling to find housing, committing over $450 million to Community Housing Providers between 2006 and 2025, and over $260 million to Specialist Disability Accommodation.
Furthermore, Bank Australia champions inclusive lending for NDIS participants by adapting its mortgage assessments to recognise government support as valid income, bypassing the traditional employment requirements that usually lock them out of the market, to ensure these individuals have equal access to home ownership opportunities.
“We’re proud to have been a founding member of the SDA Alliance, and one of the first banks to provide loans into SDA. We are committed to reducing barriers to home ownership and increasing access to appropriate homes for people with disability, and we will continue to partner with other organisations to create solutions to address this issue and be part of the broader solution in Australia,” said Tim.
A purpose-led banking system for all Australians
COBA will continue to advocate for a competitive banking landscape so customer-owned banks can help more Australians into homeownership.
“While increasing housing supply is critical to a competitive housing market, we believe a diverse banking sector is equally important to give Australians access to purpose-led institutions,” COBA CEO Michael Lawence explained.
“By offering competitive rates, tailored products, and a willingness to forgo excessive profits in favour of member wellbeing, customer-owned banks like Bank First, Bank of us, and Bank Australia are proving that genuine consumer choice and compassion are powerful tools in addressing the housing crisis,” he added.
COBA recently appeared before the Select Committee on Intergenerational Housing Inequity along with Bank First and Bank of us – you can read more about this inquiry here.