Australian Finance Group Ltd (ASX: AFG) has released its Mortgage Index for the fourth quarter of financial year 2026, revealing that AFG brokers lodged just under 39,000 mortgages valued at $28.1 billion — the company’s strongest June quarter on record. The result represents a 1.4% increase on the prior corresponding period, with AFG Securities closing out the year with a record loan book of $7.1 billion. The data highlights a pronounced geographic divide, with Western Australia emerging as the standout performer while eastern seaboard states recorded modest year-on-year declines. Investors will be watching how AFG navigates the transitional environment heading into FY27, with the company noting momentum supported by record average loan sizes and growing market share in its proprietary home loan offering.

Key Points

Australian Finance Group Ltd (ASX: AFG) is a leading mortgage aggregator and financial services group operating across Australia
AFG brokers lodged $28.1 billion in home loans across approximately 39,000 mortgages in Q4 FY2026, the strongest June quarter on record
AFG Securities recorded a record loan book of $7.1 billion at the end of FY26, up 30% in 12 months; AFG Home Loans lodgements reached $2.28 billion for the quarter, up 28.0% year-on-year
The national average loan size hit a record high of $727,345, up 7.2% on the prior year, while the national LVR fell to 63%, the lowest on record in AFG’s data
Investors should watch how borrower sentiment evolves following Federal Budget changes and RBA rate movements, and whether refinancing activity lifts from its recent lows as anticipated by management

AFG’s Record $28.1 Billion June Quarter Caps a Year of Consecutive Historical Milestones

Australian Finance Group Ltd reported that its broker network lodged just under 39,000 mortgages in the fourth quarter of FY2026, with a combined value of $28.1 billion. According to the company update released on 16 July 2026, this represents the strongest June quarter in AFG’s recorded history and a 1.4% increase on the prior corresponding period. The result is particularly notable given that it followed what AFG had described as the strongest March quarter on record, meaning the company achieved back-to-back record quarters to close out the financial year.

CEO David Bailey noted in the company update that some easing from the March quarter result had been expected, particularly following Federal Budget announcements made on 12 May 2026 and against a backdrop of a tightening interest rate cycle. Despite those headwinds, the company delivered positive year-on-year growth. AFG said it enters FY27 carrying genuine momentum, supported by a broader and more resilient earnings base than in previous years. The combination of record quarterly volume, a record loan book within AFG Securities, and record average loan sizes across the national network underlines the scale of AFG’s position within the Australian mortgage market.

AFG Securities Closes FY26 with Record $7.1 Billion Loan Book After 30% Annual Growth

AFG Securities, the company’s proprietary lending arm, delivered what the company described as strong momentum into the close of FY26. The division finished the year with a record loan book of $7.1 billion, representing a 30% lift over the prior 12-month period. The company update noted this growth was achieved while maintaining disciplined credit standards and good arrears performance, which may be of particular interest to investors assessing the credit quality underpinning the division’s expansion.

Lodgements within AFG Securities reached $1.4 billion for Q4 FY26, which the company described as the strongest June quarter on record for the division. Notably, the month of June itself was recorded as the highest single month of lodgements ever for AFG Securities. The pace of growth — 30% in a single year — is a material development for AFG’s overall earnings profile, given that the proprietary lending business generates net interest margin income in addition to the aggregation fees associated with the broader broker network. Management referenced a net interest margin ahead of the company’s previously stated through-the-cycle aspiration of 120 basis points, though the specific current NIM figure was not separately disclosed in the quarterly update.

Western Australia Stands Alone as the Only State to Grow Quarter-on-Quarter in Q4 FY26

One of the most significant findings in the Q4 FY26 Mortgage Index was the geographic divergence across Australian states. Western Australia was the clear standout performer, recording residential lodgements of $4.21 billion for the quarter. This represented growth of 0.6% on the prior quarter — making it the only state in AFG’s data to grow quarter-on-quarter — and a substantial 14.6% increase on the prior corresponding quarter in FY25. Management attributed Western Australia’s continued strength to its resource-sector economy and a supply-constrained housing market, both of which have supported robust demand for mortgage credit in the state.

South Australia also outperformed on a year-on-year basis, rising 7.9% to $1.85 billion in residential lodgements for the quarter. In contrast, the three largest markets by volume all recorded year-on-year declines. New South Wales remained the largest market with $8.7 billion in residential lodgements, but fell 1.8% on the prior year. Victoria came in at $8.1 billion, down 0.6%, while Queensland posted $5.2 billion, also declining 1.8% year-on-year. The data suggests that the slower conditions mid-quarter were concentrated in the eastern seaboard states, which are more exposed to interest rate sensitivity and the immediate reaction to Federal Budget policy changes.

Federal Budget Changes and RBA Rate Increases Shaped Mid-Quarter Borrower Sentiment

The company update highlighted that the quarter did not unfold evenly across the three months. April and May 2026 were described as strong months for lodgement activity, but June moderated as borrowers took time to assess the implications of the Federal Budget announcements made on 12 May 2026 and the cumulative impact of recent RBA cash rate increases. This pattern of a strong start followed by a softer close was consistent across the national data, and management was direct in acknowledging the influence of policy settings on short-term borrower behaviour.

David Bailey commented in the company update that the fiscal policy changes were expected to represent a period of readjustment rather than a structural shift in underlying demand for property and mortgage credit. He noted patchy investor volumes as the market absorbed the new settings, and described the data as consistent with some borrowers pausing or reassessing plans during the period. Management characterised this as transitional, pointing to the ongoing resilience of the broker channel and Australians’ continued confidence in property as a long-term asset class. The company did not disclose which specific Federal Budget measures it was referring to beyond the announcement date of 12 May 2026.

Record Average Loan Size of $727,345 and Lowest Ever National LVR Signal Borrower Equity Strength

The national average loan size reached a record high of $727,345 in Q4 FY26, representing a 7.2% increase on the prior year. This figure reflects both the ongoing appreciation of residential property values in key markets and the profile of borrowers accessing finance through the AFG network. Alongside the record average loan size, the national loan-to-value ratio fell to 63%, which the company described as the lowest level recorded in AFG’s data. A lower LVR generally indicates that borrowers hold more equity relative to their debt, which may have positive implications for credit quality across the portfolio.

These two data points — a rising average loan size and a falling national LVR — taken together suggest that the borrowers engaging with AFG-affiliated brokers are increasingly equity-rich, whether through property price appreciation, larger deposits, or a combination of both. This profile of borrower may be more resilient to interest rate increases than those with higher leverage ratios, a factor that could be relevant to assessing the credit quality of both the broader aggregation book and the AFG Securities loan book specifically. The company did not provide further breakdown of these figures at a state-by-state level in the quarterly update.

Variable Rate Products Dominate at 87.5% as Fixed Rate Retreats Following Q3 Spike

Borrower product preferences in Q4 FY26 continued to lean heavily towards variable-rate mortgages, which accounted for 87.5% of lodgements in the quarter. Fixed-rate products retreated to 3.8% of lodgements, pulling back from the Q3 FY26 reading of 5.4%. The Q3 spike in fixed-rate take-up had drawn attention as a potential signal of borrowers seeking rate certainty amid RBA tightening, but the data from Q4 suggests that trend did not persist into the June period. The overwhelming preference for variable rates may reflect borrowers positioning themselves to benefit from any future rate reductions.

The historical data table included in the company update shows that variable rate dominance has been a consistent feature of the AFG book over recent years, with the balance between interest-only and principal-and-interest also relatively stable. In Q4 FY26, the data indicates continued strong principal-and-interest preference, consistent with the broader post-regulatory shift that has characterised the market since 2017 and 2018 when interest-only lending was subject to increased scrutiny. The company did not provide a specific breakdown of interest-only versus principal-and-interest lodgements for Q4 FY26 in the text of the update, though historical data in the accompanying table provides longer-run context.

Upgrader Activity Hits 44%, a Level Reached Only Twice Before in AFG’s History

Upgrader activity — borrowers moving from an existing property to a new one — climbed to 44% of total residential lodgements in Q4 FY26. The company noted this level has only been reached twice before in its data, in 2022 and 2018. This is a notable observation, as upgrader activity at these levels typically reflects a degree of household confidence in property values and the ability to trade up the housing ladder. The elevated upgrader share in the current environment, which includes rising interest rates and Federal Budget-related uncertainty, may indicate that this cohort is less deterred by the macro environment than first home buyers or investors.

Investor participation for the quarter eased slightly from 35% to 34%, with the month of June specifically softening to 32%. Management described investor volumes as patchy as the market absorbed new settings introduced by the Federal Budget. First Home Buyer demand held steady at 12%, with management noting no noticeable impact from Federal Budget changes as yet. Refinancing activity ticked up to 16% from a record low of 15% in Q3, a development that management suggested could signal the floor in the long-running refinancing downtrend. AFG’s CEO indicated that as interest rate movements flow through to household budgets, refinancing activity is expected to lift from current levels.

AFG Home Loans Posts $2.28 Billion Quarter and Reaches Highest Broker Market Share in Recent Years

AFG Home Loans, the company’s proprietary mortgage product range offered through its broker network, delivered what management described as a standout quarter. Lodgements reached $2.28 billion for Q4 FY26, up 28.0% on the prior year. Market share of total AFG broker lodgements reached 7.9%, which the company described as the highest level recorded in recent years. This figure is significant because it indicates that AFG’s own branded products are capturing a growing proportion of the overall broker channel volume that flows through the network, increasing the proportion of higher-margin proprietary business relative to third-party lender aggregation.

David Bailey attributed the growth in AFG Home Loans to the strength and breadth of the product portfolio and the trust broker partners place in the proprietary offering. The 28.0% year-on-year increase in AFG Home Loans lodgements substantially outpaced the 1.4% growth recorded in overall AFG network lodgements for the same period, indicating that the proprietary arm is growing its internal share at a meaningful rate. As AFG moves into FY27, the company indicated it remains focused on supporting brokers with competitive products, strong service levels, and funding certainty — all of which are key enablers of continued growth in the AFG Home Loans book.

Major Bank Market Share Data Shows Westpac Brands Lead at 18% with Macquarie at 14%

The Q4 FY26 Mortgage Index also provided a breakdown of lender market share within the AFG broker network for the quarter. Westpac brands captured an 18% market share, marginally ahead of CBA brands and ANZ brands, each at 16%. Macquarie was close behind at 14%. NAB remained flat at 8% for the quarter overall but was noted as over-indexing in investor flows at 36%, suggesting the major bank has a disproportionately strong position among investment property borrowers within the AFG network despite its lower overall share.

This lender market share data provides a window into the competitive dynamics within the mortgage aggregation market and the relative appetite of major financial institutions to attract broker-originated volume. The data suggests that Macquarie’s strong broker market position, which has been a notable trend over recent years in the Australian mortgage market, continued through Q4 FY26 at 14%. The company did not provide commentary on whether these market share figures represent a material shift from prior quarters beyond the specific figures quoted, nor did it disclose market share data for non-major bank lenders in the narrative portion of the update.

AFG Enters FY27 with Broader Earnings Base and Net Interest Margin Above 120 Basis Point Target

Looking ahead, AFG’s management expressed confidence in the company’s positioning as it enters FY27. The company update noted that AFG enters the new financial year with a broader and more resilient earnings base, supported by continued growth in broker services, increased scale within AFG Securities, and a net interest margin described as ahead of the company’s previously stated through-the-cycle aspiration of 120 basis points. This is a meaningful statement for investors, as it suggests the proprietary lending division is performing above its long-run target margin, though the specific current net interest margin figure was not disclosed in the quarterly update.

Management also pointed to the structural role of mortgage brokers in the Australian home lending market as a long-term tailwind for the business. The CEO noted that the role of brokers has never been more important to borrowers navigating significant change, a reference to both the current rate environment and the policy changes following the Federal Budget. Key risks for AFG in the period ahead include the potential for borrower sentiment to remain subdued if further RBA rate increases materialise, the possibility that Federal Budget measures have a more lasting dampening effect on investor demand than management currently anticipates, and competitive pressure from major banks and non-bank lenders seeking to attract broker-originated volume. Refinancing volumes, which management expects to recover, will be a metric worth monitoring as a signal of borrower activity and AFG network revenue.