Strong finish to 2023 for AFG brokers

Australian Finance Group Ltd (ASX:AFG) brokers finished the year strongly with the AFG Index released today disclosing over $21 billion in residential mortgages lodged in the final three months of the 2023 calendar year.

AFG Chief Executive Officer David Bailey explained the results. “After a challenging year with rapidly increasing interest rates and cost of living pressures weighing on Australians, the mortgage broking channel has once again proven vital to help drive competition and guide consumers with their choice of finance options.”

“The latest results show lodgement activity was up 5.27% on the same period last year, with the Northern Territory (up 12.49%), Queensland (up 12.13%), South Australia (up 8.81%), and Western Australia (up 7.74%) leading the way.

Activity was slower in the country’s two largest states, New South Wales being up 2.51% and Victoria up 2.89% on the same period at the close of 2022.

“Customers choosing Fixed Rate products dropped even further from 4.8% to 2.3% for the quarter and Standard Variable products were up from 81.2% to 86.1%,” he said. “After a sustained period of cheap fixed rates this is the lowest percentage ever recorded within the AFG Index. With borrowers’ expectations building that the next interest rate movement may be down, it’s clear the short-term romance with Fixed Rates is well and truly over.”

“Funding disparity is easing however the Major lenders have still made up more ground on their Non-Major competitors, with their market share increasing this quarter to 60.2% from 57.5% in Q1 24.”

The Majors’ market share lift was achieved across all product categories. “Volumes for First Home Buyers were up 3.7%, Investment loans up 3.6%, Refinance and Upgrader volumes were both up 2.2% and Interest Only and Principal & Interest loan volumes heading to the Majors were both up 2.8%,” he said.

It was also an improved quarter for AFG Home Loans, where total lodgements represented 7.3% of all flow – which is up from 5.8% on the same time last year and up from 5.0% in the first quarter of Financial Year 2024.

“Average loan sizes have increased across the country, with a national average increase of just under $19,000 or 3.14%, likely reflecting the competitive conditions prevalent in the housing market at present,” he said.

“Loan to Value Ratios (LVR) were stable across the board reflecting increased property valuations in line with the increase in average loan sizes.”

Turnaround times from the time of submission to formal approval is steady at 17.3 days.

View full report here

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