Refinance share has slipped to its lowest point on record at Australian Finance Group, even as overall home loan activity remained at near peak levels.
Aggregator Australian Finance Group (AFG) has reported a record third quarter of financial year 2026 in dollar terms, with a marked shift in lodgements away from refinancing and towards upgrader and investor loans.
Refinance lull, upgrader boom
Across the three months to 31 March, AFG brokers submitted 40,784 home loan applications worth $29.54 billion.
Despite this being slightly below the December‑quarter tally of 43,501, the result is a 22.67 per cent increase on the same period a year earlier and the strongest March quarter the group has ever recorded.
The make-up of those flows has changed significantly.
Refinancing now represents just 15 per cent of lodgements – down from 20 per cent in the corresponding quarter of FY25 and the lowest level AFG has seen since it began tracking the metric.
In contrast, upgrader loans climbed to 43 per cent of flows – the highest share in four years.
Investors accounted for 35 per cent, up from 33 per cent a year earlier, suggesting more activity from established borrowers reshaping their positions rather than households chasing sharper rates.
First home buyers lost a little ground in that mix, with their share slipping to 12 per cent compared with 13 per cent in the previous quarter.
Strong quarter in a higher‑rate environment
AFG CEO David Bailey framed the result as evidence that demand was holding up despite further increases in borrowing costs.
He added that seasonal effects, with the March quarter often dampening results due to the impact of holidays, made the numbers more notable.
“In what is a seasonally quieter period due to the holiday breaks, this was the strongest March quarter on record for AFG brokers and highlights the role brokers continue to play as trusted advisers in a dynamic lending market,” Bailey said.
Bailey said inflation pressures were still a risk, but added that households had not yet pulled back in a material way.
“We recognise potential ongoing inflation risks for borrowers, but we are still seeing strong levels of lodgement activity across the network volumes,” Bailey said.
“This demand is being driven by continued wage growth and the resilience of household balance sheets.”
State trends and loan sizes
The strength in activity was broad‑based, with every state recording higher volumes than in Q3 FY25, even though each eased slightly from the December‑quarter highs.
NSW remained AFG’s largest market by value at $9.45 billion in lodgements, followed by Victoria with $8.49 billion and Queensland with $5.46 billion.
Western Australia recorded $4.19 billion, South Australia $1.94 billion, and the Northern Territory $23.2 million.
Loan sizes continued to edge higher over the year, reflecting both price dynamics and borrowing capacity at the upper end of the market.
Nationally, the average mortgage size rose to $724,353, up from $674,855 a year earlier, with NSW and Victoria again standing out at $807,607 and $706,949 respectively, compared with $782,813 and $666,657 in Q3 FY25.
AFG noted that, quarter to quarter, average loan sizes in the major states were relatively stable, indicating that the biggest shifts in borrowing power occurred earlier in the cycle.
Demand for brokers ‘endures across cycles’
Looking beyond the quarter, Bailey said that the latest figures reinforced the structural role of the intermediary channel.
He suggested that, through these shifts, the appeal of broker support had remained consistent rather than being tied to any single phase of the interest‑rate cycle.
“Importantly, demand for brokers has historically remained strong across cycles, reflecting the critical role they play in delivering better outcomes for their customers,” Bailey said.
[Related: AFG and Stryd bring retention solution to brokers]
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