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Bunbury West Australia suburb

AFG reports solid quarter as majors take a tumble

(ASX:AFG) Australian Finance Group Ltd has reported another strong quarter for the company’s 3,500+ brokers with home loan lodgements up 6.9% on the same period last year. Close to $22 billion in lodgements were recorded in the third quarter of the 2022 financial year, with non-major lenders once again closing the gap on the majors to now be at 49% of the market.

AFG CEO David Bailey said the company’s brokers had come through a period of record volumes and had delivered outstanding support to their customers. “The traditionally quieter new year period was marked by strong customer demand with homebuyers navigating the end of ‘cheap money’ as the big banks’ Term Funding Facility came to an end.”

“As a result, fixed rate volumes have plummeted,” he said. “The record low interest rate environment is over, and as lenders evaluate their future funding costs, they have been increasing fixed rates. The percentage of people choosing to fix their home loan has dropped from highs of 38.2% in Q1 22 to now be down to 20%. This is the lowest it has been in two years.

“This activity saw the market share of the country’s major lenders and their associated brands drop from 53.5% last quarter to 50.8% by the end of March 2022, the lowest level recorded in our time series.

Among the majors, ANZ was the only lender to make up ground, lifting from 7.87% last quarter to 8.72% at the end of the Q3 22. NAB took the biggest hit, dropping 2.63% from 11.83% in Q2 to 9.2% for the past quarter.

For the non-majors Macquarie made the most gains compared to the same period last year, increasing from 9.91% to 11.28%, AFG Home Loans grew to 10.19%, up from 9.11% a year ago, and Suncorp came in at 3.67% for the quarter, up from 2.63% in Q3 21.

“The average loan size is down by $8,409 on last quarter to $615,668 and Loan to Value Ratio (LVR) has also dropped to 66.8%.

“First home buyers fell by 5% on the same period last year, so it was pleasing to see that the federal government’s budget initiatives will help respond to this dip,” he said. “Investor loans maintained their level from the prior quarter, at 26%. This is an increase of 3% on the same period last year.

Interest Only products have been steady at 17% for the past 3 quarters. Refinancers have dropped slightly to 24%, whilst Upgraders were once again the drivers of most of the activity at 44% of lodgements.

“Pleasingly, lender turnaround times are once again steady at 21.9 days from application to formal approval. The easing in volumes has allowed lenders to recruit and train extra staff and work on their systems and processes, so we hope to see this improvement maintained.

“With more than 70 lenders on AFG’s panel, the opportunity for brokers to find the right lending solution for their customers is assured,” he said. “As we head into a rising interest rate environment, the competitive tension provided by the broker channel will ensure that homebuyers are always able to choose the lending solution that is the right fit for their individual circumstances.”

Download full report here

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