Australian Finance Group has reported a record-breaking surge in mortgage lodgements for Q2 FY2026, driven by strong broker performance and robust growth in Western Australia.
- Record $31.6 billion mortgage lodgements in Q2 FY2026
- First home buyer activity rises to 13%, highest since FY22
- Refinance activity hits a record low of 16%
- Western Australia leads state growth with 12.46% QoQ increase
- Broker channel maintains dominant market share above 77%
Record-Breaking Quarter for AFG
Australian Finance Group Ltd (ASX – AFG) has unveiled its Mortgage Index for the second quarter of the 2026 financial year, revealing a remarkable 25% increase over its previous best Quarter 2 performance. Total mortgage lodgements soared to $31.6 billion, marking the highest quarterly figure ever recorded by the group and a 3% rise from the preceding quarter. This momentum has propelled the first half of FY26 lodgements to a substantial $62 billion.
Broker Channel and Borrower Confidence
AFG’s CEO David Bailey attributed this surge to the enduring trust borrowers place in AFG brokers, who continue to excel in a fiercely competitive lending environment. The broker channel remains the preferred avenue for over 77% of borrowers, underscoring its critical role in delivering choice and competitive finance solutions amid complex credit conditions.
First home buyer activity showed a notable uptick, climbing from 11% to 13%, the highest level since FY22. However, this remains slightly below market expectations as stakeholders await the impact of forthcoming government initiatives aimed at improving affordability. Meanwhile, refinance activity declined to a record low of 16%, signaling a shift in borrower behaviour away from the refinancing wave that characterised previous periods.
Product Strength and Market Dynamics
AFG Home Loans products gained further traction, accounting for 7.6% of total lodgements, with a record 71% of these being AFG Securities products. This growth highlights the appeal of AFG’s own-funded offerings among brokers and their clients.
Major banks also made significant gains, achieving their highest share of first home buyer business since the first quarter of FY17. This counters narratives suggesting a retreat from the broker channel, reinforcing the channel’s vitality in the current market.
Regional Growth and Loan Trends
State-by-state analysis reveals widespread growth, with Western Australia leading the charge. The state recorded a 12.46% quarter-on-quarter increase and a staggering 37.49% year-on-year rise, driven by strong demand, constrained supply, and population growth. Queensland, Victoria, and South Australia also posted solid gains, while New South Wales experienced a slight quarterly dip but maintained strong year-on-year growth.
Average loan sizes increased nationally by 3.9%, buoyed by rises of 6.4% in Western Australia and 5.2% in Queensland. Loan-to-value ratios remained stable, while fixed-rate loans saw a modest increase from 1.8% to 3.2%, indicating a cautious but growing appetite for rate stability among borrowers.
Looking Ahead
With record residential lodgements sustained over consecutive quarters and disciplined execution of its strategy, AFG is well-positioned for continued earnings momentum. CEO David Bailey emphasised that potential changes in the interest rate environment are likely to further engage brokers and borrowers alike, reinforcing the broker channel’s central role in Australia’s mortgage landscape.
Bottom Line?
AFG’s record quarter sets a strong foundation, but evolving borrower behaviours and policy impacts warrant close watch.
Questions in the middle?
- How will upcoming government schemes influence first home buyer activity?
- What are the implications of the record low refinance activity for future market dynamics?
- Can AFG sustain its growth momentum amid shifting interest rate conditions?