Mortgage lodgements lost momentum at Australian Finance Group (AFG) in the June quarter, signaling a more cautious lending environment.
Against a backdrop of higher interest rates, regulatory changes and continued global uncertainty, the ASX-listed aggregator group lodged 38,583 home loans worth $28.1 billion in the June quarter, down from $29.5 billion worth of lodgements, or 40,784, in the prior quarter.
Yet, AFG Chief Executive Officer David Bailey still described the results as positive.
"Some easing in June was expected, especially after the federal budget announcement on 12 May and during a tightening rate cycle," he said.
"We believe the fiscal policy changes announced during the quarter will represent a period of readjustment rather than a structural shift in underlying demand," he continued.
The ratio of types of loans — investments, first-time buyers, refinancers and upgraders — were mostly consistent, quarter-over-quarter. First-time buyers made up 12% of the portfolio, unchanged from the previous quarter. Refinancers inched up to 16%, compared with 15%, while upgraders represented 44%, up from 43% three months prior. Investors were the only group to fall, down to 34% during the quarter, compared with 35% in the March quarter. Based on AFG's reported investor share, investor lending equated to an estimated $9.5 billion in the June quarter, down from about $10.3 billion in the March quarter.
In the month of June, investors made up just 32% of the portfolio, which Bailey described as "unsurprisingly" soft.
"We have seen patchy investor volumes as the market absorbs the new settings, and the data is consistent with some borrowers pausing or reassessing plans," he said. Yet, he continued to describe "this as transitional, and broker demand has remained resilient."
The period directly following the release of the 2026 to 2027 federal budget this past May created a sense of caution among mortgage holders and investors alike. While brokers said interest in entering the market remained, uncertainty surrounding policy changes encouraged many borrowers — particularly investors who would no longer receive negative gearing tax breaks on existing properties — to adopt a wait-and-see approach rather than commit to big financial decisions.
On top of that, three consecutive interest rate hikes in 2026 weighed on borrowing capacity, while persistent inflation and cost-of-living pressures continued to squeeze household budgets.
For mortgage brokers, the headwinds translated into longer decision-making timeframes and fewer immediate transactions. Many clients continued making inquiries, reviewing their borrowing capacity and discussing options. Yet few made the leap.
But now, brokers on the ground say the slowdown was only a temporary reaction to the federal budget, with market activity already beginning to recover.
"The momentum will definitely continue," Claire Viskovich, founder, director and mortgage broker at Perth-based Beez Neez Finance, told Australian Broker. "There was a lot of confusion around the negative gearing and the tax [changes]. A lot of clients were confused. Even myself. It took a while to work out exactly what the situation was with the negative gearing. But now that the federal budget has passed, we know what's happening, we know what's going to happen in the next year."
Luke Ashby, a finance and mortgage broker at Brisbane-based Emerge Finance, added: "There was obviously a lot of doom and gloom in the headlines. The budget combined with the rate rises recently, it just took a lot of the confidence out of the market. But now I'm seeing clients coming through; inquiries are picking up."
In his own business, Ashby said inquiries were down about 40% in May, year-over-year, but have slowly started to trend back up at the end of June and early July.
At AFG, the average loan size was worth more than $727,000 in the most recent quarter, up from $724,000 three months prior.
Meanwhile, major banks ceded ground to non-majors. The percentage of major banks making lodgements in the quarter fell to 58%, down from 60%. Non-major banks, by contrast, represented 42% of lodgements, up from 40% the quarter before. Westpac brands captured 18% of share for the quarter, with Commonwealth Bank of Australia (CBA) and ANZ brands at 16%. Macquarie had 14%, while National Australia Bank (NAB) remained flat at 8%.
During the quarter, lodgments fell across four of the six states: New South Wales, Queensland, South Australia and Victoria. Northern Territory and Western Australia bucked the trend during the quarter with higher lodgement volumes.
For the year, lodgements in South Australia were up 7.9%, while Western Australia had gains of 14.6%, year-over-year.
"Western Australia's continued strength, driven by its resource-sector economy and supply-constrained housing market, reinforced its position as a standout contributor to national volumes," Bailey said.
The CEO added: "as we move into the new financial year, we remain focused on what we can control. AFG enters the new financial year with a broader and more resilient earnings base, supported by continued growth in broker services, increased scale within AFG and a net interest margin ahead of our previously stated through-the-cycle aspiration of 120 basis points."
