Expanding our broker support team

As brokers diversify and business lending becomes a part of many brokers’ daily remit, we’re expanding the scope of AFG Home Loans Business Relationship Managers to help brokers navigate commercial lending.

To support the growth, we’ve recently appointed Karlee Butcher to join the Sydney team as AFG Home & Commercial Loans – Business Relationship Manager.

Karlee will be providing support to AFG brokers in the greater Sydney area. AFG National Sales Manager Hayden Cush explained the expansion of the team and welcomed Karlee in a recent note to AFG brokers. “The AFG Home Loans team took over the sales functionality of the AFG Commercial product back in July last year. The team have had to upskill in the commercial lending space and have done a great job this year.

“The AFG Commercial powered by ThinkTank products look and feel like a residential lending product and the AFG Business platform does the heavy lifting for those brokers who are new to commercial deals.

“It made sense to move this sales function over to the team that would have day to day interactions with AFG brokers, supporting them as they help their clients.

“We went from having one BDM on the ground specializing in AFG Commercial, to 10 BDMs and four support staff able to assist our brokers.”

Karlee has hit the ground running and is excited by the challenge of the new role. “I am working my way through a plan to meet all of my new broker partners in my first 60 days and look forward to finding out how I can help and establishing relationships with them and their teams

“I’m most excited to represent AFG Home & Commercial Loans in supporting each of our broker partners with a range of offerings and solutions for their clients,” she concluded.

AFG successfully completes upsized RMBS transaction

Australian Finance Group Ltd (ASX: AFG) wholly-owned subsidiary AFG Securities Pty Ltd has successfully priced an upsized A$750m Residential Mortgage Backed Securities (RMBS) issue.

The AFG 2021-1 Trust $750 million issue of Australian prime residential mortgages is AFG Securities’ 11th issue since 2013, taking the total paper issued to the market by AFG Securities to A$4.825 billion.

The transaction priced yesterday, 5 May 2021 and is due to settle next Wednesday, 12 May 2021.

AFG Chief Executive Officer David Bailey welcomed the support received for the transaction from both domestic and international investors. “We are very pleased to be able to upsize the transaction from $500 million to $750 million with the support of new and returning investors.”

“AFG Securities mortgages continue to perform well, and the broker proposition in the Australian home lending market has never been stronger.

“AFG Securities residential home loan products have both depth and breadth, and the market has responded. Our conservative underwriting standards and consistent management of the portfolio means our loans track well below the Standard & Poor’s Performance Index (SPIN).

“We are very pleased with the upsizing of this transaction and look forward to continuing to deliver a competitive range of home loans to our brokers and their customers and sound investment opportunities to the RMBS market,” he concluded.

Details of the notes are as follows:

ClassIssue Size
$(m)
Expected Ratings
S&P / Fitch
Initial Credit SupportInterest RateExpected WAL
A1$675.00AAAsf/AAAsf10.00%BBSW + 75 bps2.5yrs
A2 $43.50AAAsf/NR4.20%BBSW + 105 bps4.4yrs
B$10.50AAsf/NR2.80%BBSW + 135 bps4.4yrs
C$8.70Asf/NR1.64%BBSW + 170 bps4.4yrs
D$5.40BBBsf/NR0.92%BBSW + 270 bps4.4yrs
E$3.15BBsf/NR0.50%BBSW + 500 bps4.4 yrs
F$3.75NR/NRundisclosed5.0yrs

NAB and ANZ acted as Joint-lead Managers on the transaction.

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Housing leads the way

Australia’s housing market continues to lead the country’s economic recovery with Australian Finance Group (ASX:AFG) brokers lodging a record $20.6 billion in home loan applications for the third quarter of FY21. This represents a 3.79% lift on the prior quarter and a significant 34.32% increase on the same period last year.

AFG CEO David Bailey explained the results: “Record low interest rates, effective government stimulus packages and an improving consumer outlook have contributed to increased activity.

Looking around the country, New South Wales lodgements are up 9.37% on last quarter and 40% on Q3 FY20. Victoria is up 6.60% on last quarter and 24.86% on Q3 FY20. “Historically, Q3 usually records slower growth than Q2 so the solid results in NSW and Victoria are even more impressive.

In South Australia, lodgements are up 1.51% on last quarter and up 33.88% on the same period in 2020. In Western Australia, lodgements are down 7.61% on the previous quarter, which was its strongest period since 2015. Lodgements in WA are up 45% on Q3 FY20. The Northern Territory is up 5.79% on last quarter and down 13.26% on the same period last year. Queensland is down 2.66% on a very strong prior quarter and up 37.38% on Q3 2020.

“Rising house prices have contributed to a fall in Loan to Value Ratios (LVR), the national average LVR is down from 73.3% to 71.9%. The national average mortgage size has increased by 5.9% to $574,948 however rising house prices are outpacing loan sizes and maintaining safety buffers, as reflected in the reducing LVRs.

“Highly competitive fixed rates, largely driven by the Big 4 banks’ access to cheap government funding has seen borrowers locking in their mortgages, with the percentage rising from 29.3% to 34% for the quarter.

First Home Buyer (FHB) activity has slowed, down from 22% to 18%, but this figure is still historically high. “The state and federal government FHB incentive schemes have done their job and likely pulled forward some demand,” said Mr Bailey. Refinancers are steady at 22% and the percentage of Upgraders has lifted from 42% to 43%.

“With interest rates at record lows and yields slowly improving in some markets, Investors are edging back into the market, with an increase from 21% last quarter to 23%. The longer-term average for Investors’ share of the market is around 35%.

“Interest Only lodgements are up from 12% to 14%, however these are still historically low as borrowers take the opportunity to pay down the principal during this period of record low interest rates.

The Big 4 Banks and their stable of brands captured 57.1% of the market, which is down from a high of 66.8% in the final quarter of FY20 which coincided with the peak of nationwide lockdowns. NAB was the only one of the Big 4 and their brands to record an increase in market share while the others all lost ground. Notable movements amongst the non-majors were AFG Home Loans up from 7.76% to 9.10% and Macquarie down from 11.45% to 9.93%.

“With such a competitive lending market and increased market activity, lender turnaround times continue to rise, up from 25.2 days last quarter to 27.1 days. This is the highest it has been at any point over the last three years.

“As our country recovers from the disruption of the pandemic, a resilient housing market built on sound lending standards will help keep Australia’s recovery ahead of many of the world’s economies,” he concluded.

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