Company Interview / Mortgage boom rolls on as AFG posts record third quarter

Key points:

Record March quarter with around $30 billion in home loan lodgements Strong upgrader and investor demand, with a lift in Melbourne activity Refinancing at historically low levels, first home buyer share near long‑run average Positive outlook for funding costs, margins and growth in AFG’s lending book

Australian Finance Group (ASX:AFG) reports a record March quarter, with close to $30 billion in home loan lodgements, according to David Bailey of Australian Finance Group. Bailey states this is the strongest third quarter the group has seen, driven largely by resilient housing demand and a strong cohort of “upgraders”, who account for about 40–43% of flows. In Bailey’s view, this points to Australians remaining aspirational, supported by stronger household balance sheets and robust employment conditions, despite higher interest rates.

Bailey outlines that investor lending represents roughly 35% of flows, with activity evident across most states and a notable lift in Melbourne after a quieter period. Refinancing activity is described as near all‑time lows at about 15%, which Bailey interprets as an indication that front‑book and back‑book pricing are relatively aligned, reducing the incentive to refinance. First home buyers sit at around 10–12%, which Bailey sees as in line with longer‑term trends.

On outlook, Bailey highlights two core business pillars: distribution and the manufacturing/lending book, now around $6.7 billion and mostly prime. He notes favourable warehouse refinancings and clearer visibility on funding costs, which he expects to support net interest margins and future growth.