As the war between the big four banks over home loan market escalates, credit unions and building societies have claimed their largest slice of the banking market over the past ten years.
Data released from the December quarter has shown that Credit Unions have secured more than 10 per cent of the market.
Last year the federal government increased guarantees for non-bank lenders, thus allowing them to be competitive in the mortgage market.
Louise Petschler chief executive of Abacus - the representative body for Credit unions, mutuals and building societies stated that the increase in the mutual market was proof that customers were prepared to shop around for the best available mortgage deal.
Consumers are realising that credit unions and building societies are also a player when it comes to an alternative to the big banks.
The NAB has stated that there has been an excellent response to their offer of $700 for switching to the NAB from another bank.
Due to the NAB's announcement Westpac dropped its mortgage application fee and cut interest rates on some home loans by 0.8 percentage points, and on Friday the Commonwealth Bank promised $1200 to NAB customers who were prepared to make the change.
Treasure Wayne Swan said that the government's reform package had assisted in greater flexibility in the banking sector and initiated "home loan war".
However Paul Ryan chief executive and founder of non-bank lender Intouch Home Loans stated that if the Commonwealth Bank really wanted to help their existing customers they should drop their interest rates by 10 points.