Australian Finance Group (AFG) has announced record profits for the first half of the financial year, with NPAT up 36% to almost $25m up to the end of December 2020.
The ongoing rebound of the housing market after COVID, aided by government policies, resulted in continuing growth within the mortgage broking sector and thus strong profits for groups such as AFG.
David Bailey, CEO of AFG, cited the pandemic as a motivator for a key consumer group choosing to refinance and thus engage mortgage brokers.
“At the start of the pandemic, there was a high level of refinance activity as customers tried to make their household budget go further,” he said. “What we have found since then is those that we call ‘upgraders’ have come to the forefront.
“Customers who are comfortable in their work environment in terms of job security see an opportunity to either move to a better location or have simply said ‘I need a bigger house’, for example if we have more lockdowns then they can’t operate with two kids and wife all working from home at the same, so they need more space. That’s been quite a feature over the last three months in particular, probably longer than that. We think that’s been a drive in the market.”
Government policies also had a significant impact.
“The first home buyer incentive (was a key factor)” said Bailey. “If you look at our data historically, we generally do 10-12% of all flow of first home buyers and that number has jumped to over 20% in some months.”
“With federal government and state government offering up to $50,000 in incentives to get into a house earlier, it has brought forward some construction or first home buyer decisions of a large number of consumers.”
Bailey was able to identify several reasons why the industry was able to respond so quickly after the pandemic.
“There’s been a lot of factors,” he said. “One of the factors was that, in a time of pandemic, customers had more time to understand their finances and needed advice around them. The best place to turn has been a broker and you see that reflected in broker market share.”
“Brokers have been quick to embrace a new way of working via video conferencing and more efficient processing of documents electronically, which has facilitated and fueled a better customer experience when you’re also getting competition and choice for those customers.”