Bank of Queensland's (BOQ) home loan book is shrinking as competition in Australia's mortgage space continues to intensify. The result lands as the Brisbane-headquartered lender continues a major overhaul of its digital platforms, while also sharpening its focus on proprietary distribution channels.
BOQ reported its first half 2026 interim results this week, revealing a contraction in its mortgage portfolio. The bank's home lending book fell by $2.24 billion in the first half of FY26. That's a 4% decline compared with the second half of FY25.
Housing balances also dropped to $50.15 billion by February 2026, down from roughly $52.4 billion at the end of FY25, or the six months ending 31 August 2025. On a yearly basis, the bank's home loan books are down 8%, as an increase in refinancing activity and aggressive competitor pricing drive more customers to consider switching to other lenders. The decline also underscores the intensity of competition across the mortgage market and raises questions for brokers around BOQ’s lending appetite and potential implications for turnaround times in the months ahead.
BOQ's Managing Director and Chief Executive Officer Rob Finch conceded that Australia is entering "a period of uncertainty" amid global tensions, stemming from the Middle East, and higher interest rates at home.
But he added that the results "reflect the strong execution and transformation capability within BOQ. We continue on simplifying our business and have delivered another period of disciplined cost management.
"The 1H26 growth profile reflects the group’s continued prioritisation of business lending growth over home lending while origination transitions to the digital platform and portfolio‑run‑off remains elevated,” he added.
The bank added that its earlier strategies about how it distributes home loans are now starting to show up in the numbers, as different parts of the business are behaving differently. Total home loan applications within the group fell during 1H26 to 12,900, down from 14,400 in 2H25. Within that total, ME Bank had 9,300 applications, down from 11,100 six months earlier. Meanwhile, BOQ-branded channels grew to 2,800 home loan applications, compared with 2,700 the prior half.
BOQ said the ME portfolio is growing in line with the market, while the Virgin Money Australia (VMA) brand, BOQ's digital-first retail banking brand, and the BOQ-branded channels are contracting. The bank attributed the weaker performance to a mix of factors, including a temporary pause in broker origination through its legacy platform and increased refinancing activity with other lenders.
BOQ's commercial volumes grew approximately 7%, or $934 million, on a sequential basis, helping offset a decline in home lending.
Despite the contraction, brokers remain central to BOQ's mortgage flows. Around 71% of new home loans originated via brokers during the first half, highlighting the channel’s continued importance even as overall volumes decline. That's up from about 60% at the end of last financial year.
Broker-originated loans now account for 55% of the bank's total mortgage book, up from 55% in August 2025. Most of these broker-written loans sit within the ME Bank portfolio, which makes up 43% of the total portfolio, while legacy BOQ-branded mortgages represent a smaller 7% share.
The lender added that it will continue to focus on its internal channels as it pivots to digital platforms.
"Momentum is rebuilding in proprietary BOQ channels," Finch said, adding that it is “reshaping economics of home lending through higher returning proprietary channels and optimised distribution footprint post branch conversion."
