Company Interview / AFG predicts refinancing wave as budget impacts bite

Key points:

Record June quarter lodgements for Australian Finance Group (ASX:AFG), with post‑budget slowdown in volumes but strong enquiryRefinancing expected by Bailey to rise as interest rate differentials and competition between majors such as Westpac (ASX:WBC) increaseWestern Australia flagged as strongest housing market, with Queensland emerging and Victoria lagging

Australian Finance Group (ASX:AFG) reports a record June quarter for mortgage lodgements, which David Bailey attributes to strong activity up to the 12 May federal budget, followed by a slowdown as borrowers reassess policy changes. Bailey states that enquiry levels remain elevated, with customers turning to brokers to understand new requirements rather than immediately lodging applications. He notes a shift towards “upgraders” trading into better locations or larger homes, while refinancing sits at historically low levels but is expected, in his view, to lift towards longer-term averages as rate differentials widen.

Bailey points to rising competition among major lenders, including Westpac (ASX:WBC), as new customer rates become more attractive than existing “back book” pricing, which he suggests should stimulate refinancing over the next 6–12 months. He highlights a record-low national loan-to-value ratio of about 63%, interpreting this as higher-deposit, more cashed‑up borrowers driving activity as elevated house prices push some buyers out.

Across states, Bailey sees Western Australia as the standout, underpinned by resources, migration and strong employment, while Victoria remains subdued and investors there have pulled back post‑budget. He identifies Queensland as a key market to watch, citing varied regional economies and improving affordability.