How Australia’s Big Four Banks Quietly Cut Mortgage Broker Costs
Most Australian banks pay approximately 0.60% commission per mortgage through brokers. Australia’s Big Four banks—Commonwealth Bank, Westpac, ANZ, and NAB—are now moving to bypass mortgage brokers in favor of direct lending channels.
This shift, unfolding throughout 2025, is about more than cutting fees—it's a strategic move to reclaim control of the customer acquisition funnel by building direct digital systems.
By bypassing brokers and their 0.6% commissions, the banks effectively reduce acquisition costs, turning mortgage origination into a direct-to-customer, technology-enabled process.
At an estimated $5 billion in annual broker commissions in Australia, this move reshapes customer acquisition economics and forces incumbents and fintechs alike to rethink mortgage distribution.
Why Bypassing Mortgage Brokers Changes the Acquisition Constraint
Mortgage brokers traditionally serve as a distribution layer, connecting borrowers with banks, and banks pay about 0.60% commission per mortgage. For typical mortgages—often several hundred thousand dollars—this commission represents a significant cost.
By building direct digital platforms that allow customers to apply and qualify online—using automation and AI for underwriting—banks shift the acquisition constraint from broker network reach to digital channel efficiency.
Commonwealth Bank, for instance, has already expanded its direct mortgage app to bundle personal financial management and pre-approval tools. This ecosystem not only attracts customers directly but also reduces the friction and fees involved in broker commissions.
This mechanism mirrors how fintech disruptors break incumbent advantages: owning the customer interface cuts out intermediaries, reducing customer acquisition cost from a percentage commission to fixed infrastructure expenses.
The Scale Impact: Millions of Loans at Infrastructure Cost
Australia’s Big Four banks originate approximately 1.5 million new residential mortgages annually. At an average mortgage size of $600,000, broker commissions near $3,600 per loan.
By bypassing brokers and promoting direct digital channels, banks save an estimated $5 billion annually in commissions. This doesn’t just cut expenses—it liberates capital for reinvestment in product innovation or pricing competitiveness.
For example, Westpac’s direct platform now integrates AI-driven pre-assessment that detects funding eligibility faster than traditional broker-led processes, improving loan conversion rates.
This cost drop shifts banks from a commission-variable cost model to a partially fixed-cost digital infrastructure model, decoupling loan volume from proportional acquisition expenses.
This constraint shift is similar to what we’ve seen where companies cut per-user acquisition spending from $8-$15 down to near zero by embedding acquisition inside owned distribution channels, as explained in how software companies use acquisition for distribution.
Competitive Positioning: Direct Lending as a Durable Advantage
Refusing mortgage brokers erodes their bargaining power, reducing banks’ dependency on an external network rife with competing incentives and customer leakage.
The Big Four’s direct-to-consumer systems build durable advantages by owning key customer data and touchpoints. This positioning makes onboarding smoother, speeds underwriting, and enables upsell through personalized financial products.
Notably, fintech lenders also use direct digital channels but pay for customer acquisition through other expensive marketing. Big banks’ ability to leverage existing brand trust with lowered distribution cost shapes a higher operating leverage.
This strategy contrasts sharply with banks sticking to broker-heavy models—who face fixed commission costs plus declining margins—who cannot easily shift acquisition expenses away from percentage fees.
It also mirrors moves from other industries like retail banking’s shift to digital branches and online wallets, which cut staff costs and customer acquisition simultaneously, as discussed in how to automate business processes for maximum business leverage.
Why This Matters to Builders and Operators
For financial operators and fintech builders, Australia’s Big Four banks demonstrate the power of changing the distribution constraint from external intermediaries to owned digital systems.
This move reveals that the true barrier isn’t mortgage underwriting itself but the method of customer acquisition and the associated cost structure.
Lenders who replicate or improve on these direct digital funnels will control more profitable origination flows and gain pricing flexibility.
In a market where mortgage rates are being squeezed by macroeconomic factors, lowering acquisition cost by 50%-100% per loan directly boosts the bottom line.
It also exposes a weakness in broker-reliant models that fintech startups and challenger banks must reckon with: without scale in direct customer access systems, commission overheads will erode profits and growth potential.
Similar constraint redefinitions appear in why Wall Street fears Fed rate cut delays, where shifting the core constraint reshapes multiple operational levers in cascade.
Related Tools & Resources
In a landscape where direct customer acquisition and seamless relationship management are becoming critical competitive advantages, tools like Capsule CRM can help financial operators and fintech teams streamline interactions and retain control over borrower communication. Simplifying customer tracking and sales pipeline management supports the strategic shift towards owning digital distribution channels as described in the article. Learn more about Capsule CRM →
Full Transparency: Some links in this article are affiliate partnerships. If you find value in the tools we recommend and decide to try them, we may earn a commission at no extra cost to you. We only recommend tools that align with the strategic thinking we share here. Think of it as supporting independent business analysis while discovering leverage in your own operations.
Frequently Asked Questions
How much commission do Australian banks typically pay mortgage brokers?
Most Australian banks pay approximately 0.60% commission per mortgage through brokers, which represents significant acquisition costs for loans averaging $600,000.
Why are Australia’s Big Four banks bypassing mortgage brokers?
The Big Four banks aim to reduce broker commissions and control customer acquisition by building direct digital lending platforms, saving about $5 billion annually and improving efficiency.
How does direct digital lending change the customer acquisition process?
Direct digital lending shifts the acquisition constraint from broker network reach to digital channel efficiency, allowing automation and AI to streamline application, underwriting, and reduce commission fees.
What financial impact does bypassing brokers have on Australian banks?
By cutting broker commissions amounting to roughly $5 billion annually, banks reduce their acquisition costs from variable commission fees to fixed digital infrastructure expenses, enabling reinvestment in innovation and pricing.
How many residential mortgages do Australia’s Big Four banks originate annually?
They originate approximately 1.5 million new residential mortgages each year, with an average mortgage size around $600,000.
How do direct lending platforms improve competitive positioning for banks?
Direct-to-consumer systems build durable advantages by owning customer data and touchpoints, accelerating onboarding and underwriting while lowering acquisition costs compared to broker-heavy models.
What role does AI play in the banks’ direct mortgage platforms?
AI enables faster underwriting and pre-assessment processes, as seen with Westpac’s platform, improving loan conversion rates and reducing reliance on broker-led workflows.
Why is lowering mortgage broker commissions important for fintech and challenger banks?
Fintechs must develop scale in direct digital customer access to avoid high commission overheads that erode profitability, as broker reliance limits growth and pricing flexibility.