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Brokers aggregating under AFG have set a new record for lodgement volumes during a third quarter, but refinancing activity dipped to record lows.
ASX-listed aggregator Australian Finance Group (AFG) has provided insight into what loans are in demand with its latest AFG Index, covering the third quarter of the financial year ending 30 June 2025 (FY25).
Released on Wednesday (16 April), the index revealed that AFG brokers lodged record volumes for a third quarter, with $24.1 billion in residential lodgements during the three months to 31 March 2025.
This was 18.5 per cent higher than the $20.3 billion in lodgements during the previous corresponding quarter and 10.2 per cent higher than the previous third-quarter record ($21.9 billion) set during FY22.
AFG data also showed the average loan size increased to a record high of $674,855, surpassing the record set during the previous quarter and representing a 7.3 per cent year-on-year spike.
The aggregator also reported a 10.4 per cent increase in the number of loans lodged (35,686) compared to the third quarter of FY24.
Around the country, Western Australia posted the strongest year-on-year growth in lodgement volumes (up 31.5 per cent), followed by NSW (up 19.7 per cent), Queensland (up 18.6 per cent), South Australia (up 18 per cent), and Victoria (up 12.4 per cent).
Refinancing dips
The AFG data also revealed a dip in refinancing activity.
Refinancing activity dipped to its lowest proportion of volumes on record (20 per cent), down 25 per cent from the proportion of volumes recorded during the third quarter of FY24 (27 per cent).
Speaking to The Adviser, AFG CEO David Bailey said the prospect of future interest rate cuts in coming months had likely caused many potential refinancers to delay plans temporarily.
“With cashback offers having run their course and the prospect of future rate cuts looking more likely, borrowers are potentially waiting to see where rates head before looking at their options to refinance,” Bailey said.
During the March quarter, investor lending remained steady at 33 per cent of the market, with upgrader lending rising to 42 per cent from 40 per cent in the previous quarter – the highest proportion recorded by AFG since the fourth quarter of FY22.
First home buyer activity also ticked up slightly to 12 per cent from 11 per cent during the second quarter of FY24.
Bailey noted the record Q3 lodgement volumes, saying the increased activity underscored the growing preference for the third-party channel.
“Australian mortgage brokers are the channel of choice for home finance, with now more than three-quarters of all borrowers choosing brokers to help them navigate a continually complex lending market,” Bailey said.
“With all eyes on the global economy, predictions of future interest rate cuts in Australia becoming increasingly likely, and the resilience of housing through cycles, brokers are bracing for a further surge in activity as we head into the final quarter of FY25.”
[Related: AFG brokers lodging record volumes]
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