Australian Finance Group Ltd (ASX:AFG) today released its AFG Index for Q2 2026, revealing a powerful surge in mortgage activity across the country, delivering a new quarterly record and smashing the previous best Quarter 2 result by 25%.
Total lodgements reached $31.6 billion, the highest quarterly result ever recorded by AFG and a 3% increase on the previous quarter, taking FY26 first half lodgements to $62 billion. AFG CEO David Bailey said the result underscores both borrower confidence and the strong performance of AFG brokers in a competitive lending landscape.
“This quarter’s record lodgement volume highlights the critical trust AFG brokers continue to earn in supporting Australians seeking access to competitive finance solutions. Their expertise and commitment are evident in the strong uplift across multiple borrower segments,” he said.
First home buyer activity increased from 11% to 13% which is the highest result since FY22, though still slightly below expectations as the market awaits the impact of upcoming government schemes. Mr Bailey noted: “While we’ve seen a lift in first home buyer activity, broader affordability pressures remain. Our brokers are working closely with borrowers navigating purchasing power and competitive market conditions.”
Refinance activity fell to 16%, the lowest level on record. “This shift reflects changing borrower behaviour,” said Mr Bailey. “The refinancing wave that defined prior periods has moderated. Brokers continue to be well positioned to support customers with their lending decisions and future opportunities.”
AFG Home Loans products continued to strengthen their position in the market with 7.6% of lodgements with an AFG Home Loans brand. Of this, a record 71% were AFG Securities products. “Our own-funded products continue to resonate with our brokers and their customers, making this result one of the highlights of the quarter,” he said.
The quarter saw a steady split between Major and Non-Major lenders, reinforcing the reliance of major banks on the broker channel. Major banks achieved their highest share of first home buyer business since Q1 FY17.
“Despite commentary suggesting a shift back to what is now a much smaller branch network, the data tells a different story,” said Mr Bailey. “With broker market share sitting above 77%, the channel remains vital for borrowers seeking choice, competition, and support in a complex credit environment.”
State-by-State Performance
- Growth was recorded across nearly all states, with Western Australia leading the nation.
- New South Wales: Down 0.53% Quarter on Quarter (QoQ), up 19.52% Year on Year (YoY)
- Queensland: Up 4.54% QoQ, up 27.87% YoY
- South Australia: Up 0.91% QoQ, up 22.47% YoY
- Victoria: Up 2.66% QoQ, up 24.45% YoY
- Western Australia: Up 12.46% QoQ and 37.49% YoY — the strongest growth nationally
Mr Bailey said WA’s results highlight sustained momentum. “Western Australia continues to outperform the national market. Strong demand, constrained supply and population growth are contributing to high levels of activity.”
Record loan sizes were seen across the country; Quarter 2 saw a 3.9% lift in average loan size fuelled by lifts of 6.4% and 5.2% in WA and QLD respectively. NSW comparatively saw a more modest increase of 2.6%.
Loan to value ratios remain steady, while fixed rate loans increased from 1.8% to 3.2%, indicating a small but notable shift in borrower appetite for rate stability however still well below longer term averages of fixed rate appetite.
Brokers continue to be the channel of choice. “Potential changes in the interest rate environment will drive more engagement, and that is a positive for brokers,” he said. “Record residential lodgements across consecutive quarters, continued growth in AFG Home Loans, and disciplined execution of the group’s strategy provide a strong foundation for sustained earnings momentum,” he concluded.
