Australians are turning their backs on the scandal-ridden big four banks in search of better home loan deals, new analysis shows.

The number of Australians considering applying for a loan through an online lender, rather than a traditional bank or credit union, has jumped to 85 per cent of all , up from 48 per cent two years ago, figures from financial comparison site Mozo.com.au show.

When asked specifically about the behaviour of the big banks, 36 per cent of the 1001 respondents said it would see them shift to an online lender, with a further 49 per cent open to the prospect of moving their money.

“With the big banks staggering from scandal to scandal, it’s not surprising many people in the market for a home loan would be weighing up their options,” Mozo director Kirsty Lamont said.

Interest in online lenders has jumped to 85 per cent of inquiries in two years. Photo: Getty

“The era of the big banks slugging borrowers with a trust premium in the form of higher interest rates and fees is fast coming to a close as more people look for value over big-brand loyalty.”

Online lenders are often cheaper as they don’t incur the costs of running branches and other legacy institutions.

Currently, most borrowers with the big four sit on home loan interest rates about 4.5 per cent or higher.

Cost was the key concern for those taking out a loan, with 75 per cent of respondents saying they chose an online lender because interest rates are cheaper.

“Now, for the typical $400,000 home loan people could be saving up to $2800 a year by switching,” Ms Lamont said.

“It’s a substantial amount of money – you’re talking over $70,000 over 25 years. That’s a new car, or renovations or a lot of very nice overseas holidays.”

Last year the average home loan in Australia for owner-occupiers was $386,300 and $338,900 for first-home buyers.

But despite the big four offering some of the more expensive home loans on the market, they still scored 80 per cent of new loans last year.

The last month-on-month banking statistics from the Australian Prudential Regulation Authority (APRA) revealed that in January, ANZ was the only one of the major banks to report a decline in both its owner-occupied and investment mortgage portfolio.

“In my view a lot of it comes down to trust. People just don’t know who to trust. A mortgage is the biggest financial commitment that a lot of people will make and there’s an uncertainty with going with an online lender who they might not have heard of before,” Ms Lamont said.

The risk factor

Steve Mickenbecker, group executive of comparison site Canstar, said the risk of going with a smaller provider was low.

“It’s a long time since a lender has failed in Australia, but it can happen,” Mr Mickenbecker said.

“But if the loans are in good shape, people are making their repayments, are likely to placed with another lender.

“The downside of moving to a smaller lender is that you won’t have a branch to go into – with ISB and HSBC, foreign subsidiary banks who have been aggressive with their pricing, you can’t walk into a branch. The main issue isn’t risk, it is service level.”

He said Australians who were willing to shop around could save up to 1 percentage point on their loans.

“Is that service worth 1 per cent? Well for the privilege of walking into a branch, that is pretty expensive.”