Disclaimer: This article is for general informational purposes only and does not constitute financial advice. Mortgage products and market conditions vary. Consult a licensed financial adviser or mortgage broker before making any borrowing decisions.
The State of Australian Housing Finance in 2026
The Australian mortgage market has entered 2026 in a state of recalibration. After the most aggressive rate-hiking cycle in a generation — the RBA lifted the cash rate from 0.10% to 4.35% between May 2022 and November 2023 — the central bank delivered two 25-basis-point cuts in Q4 2025 and has held at 3.85% through mid-2026. This has reshaped borrower psychology and, by extension, the data flowing through Australian Finance Group’s network.
According to Kalkine’s analysis of AFG’s publicly reported trading updates, the aggregator processed $19.2 billion in residential mortgage lodgements in the March 2026 quarter alone, up 6.1% on the prior corresponding period. Investment lending accounted for 31% of that volume, the highest proportion since early 2022. Meanwhile, CoreLogic’s national Home Value Index rose 4.7% in the first five months of 2026, underscoring that credit demand remains robust even at restrictive interest-rate levels.
Table: AFG Key Metrics – H1 2026 vs H1 2025
| Metric | H1 2025 | H1 2026 | Change |
|---|---|---|---|
| Total residential lodgements | $36.2B | $38.4B | +6.1% |
| Variable-rate share of new loans | 74% | 82% | +8pp |
| Fixed-rate share of new loans | 26% | 9% | -17pp |
| Refinancing as % of lodgements | 38% | 34% | -4pp |
| Investment loan share | 27% | 31% | +4pp |
| Average loan size (owner-occupied) | $564,000 | $572,800 | +1.6% |
Source: AFG Quarterly Trading Updates, RBA; data as at 30 June 2026.
Why Brokers and Aggregators Are Now the Pulse of Mortgage Demand
The mortgage broker channel originated 74.6% of all new Australian residential loans in the March 2026 quarter, according to the Mortgage & Finance Association of Australia. That is a record high, up from 59% in 2019. With three in every four new mortgages flowing through intermediary networks, aggregators like AFG have become the most timely and granular window into household credit behaviour.
AFG’s panel of over 70 lenders includes all four major banks, most second-tier banks, and non-bank lenders such as Resimac and Pepper Money. The diversity means AFG’s data reflects the full credit spectrum — from prime borrowers refinancing for a 6%-handle rate to near-prime borrowers seeking alternative documentation loans.
This intermediary-driven model also explains why AFG lodgement data tends to lead official housing finance statistics by four to eight weeks. When the ABS reported a 1.2% rise in new loan commitments in June 2026, AFG’s lodgements had signalled that increase as early as late April.
The Great Fixed-to-Variable Migration: A Defining 2026 Trend
The single most dominant mortgage market trend AFG is tracking in 2026 is the retreat from fixed-rate products. Fixed-rate lending peaked at 46% of AFG lodgements in July 2022, when borrowers rushed to lock in sub-2% pandemic-era rates. By June 2026, that share had collapsed to just 9%.
Three forces are driving this shift:
- Rate-cut expectations: With the RBA cash rate at 3.85% and markets pricing in one further 25bp cut by December 2026, borrowers are reluctant to lock in fixed rates that are already priced 50–80 basis points above discounted variable offers.
- Break-cost awareness: Many borrowers who fixed at 1.99% between 2021–2022 and then broke their loans in 2025 incurred break fees of $8,000–$20,000. That experience has left a behavioural scar, depressing appetite for new fixed terms.
- Cashback and retention incentives: Lenders are offering 20–30bp upfront discounts and $2,000–$4,000 cashback on variable-rate refinances, tilting the economics further away from fixed.
Q: Why are borrowers choosing variable over fixed rates in 2026?
The core reason is pricing expectations. As of Q2 2026, the average discounted variable rate for an owner-occupied, principal-and-interest loan with an LVR below 80% sits at 5.99%, while comparable three-year fixed rates average 5.79%. The 20bp apparent advantage for fixed is outweighed by the market consensus that the RBA will cut at least once more, which would bring variable rates below 5.69% and leave fixed-rate borrowers above-water but unable to refinance without incurring break costs.
Refinancing Activity: Moderating but Structurally Elevated
Refinancing accounted for 34% of AFG lodgements in H1 2026, down from the H1 2024 peak of 42% but still significantly above the 2015–2020 average of 23%. The elevated level reflects the ongoing roll-off of fixed-rate loans — an estimated $154 billion of fixed-rate mortgages have expired since mid-2023, with a final $27 billion tail maturing across 2026, per RBA estimates.
Cash-rate-linked refinancing has also become stickier because of improved digital processes. Borrowers can now discharge and settle a refinance in as little as 14 days, down from an average of 35 days in 2019, which reduces friction and encourages rate-chasing.
Q: Is the refinancing wave over in Australia?
Not yet, but it is transitioning. The sheer volume of fixed-rate expiries is now largely behind the market, but the behavioural habit of reviewing a home loan every 12–18 months is now embedded. AFG’s data shows that 19% of its March 2026 lodgements were “serial refinancers” — borrowers who had already refinanced at least once in the preceding 24 months. This cohort is price-sensitive and tends to jump lender even for a 15bp differential.
Regional Divergence: Perth, Adelaide, and Queensland Gain Share
Australian housing finance is not a single story. AFG’s lodgement data reveals a sharp geographic rebalancing underway in 2026.
| Market | Share of AFG Lodgements (H1 2026) | Change vs H1 2024 | Median Home Value (May 2026, CoreLogic) |
|---|---|---|---|
| Sydney | 28.4% | -1.8pp | $1.26M |
| Melbourne | 23.1% | -1.2pp | $918K |
| Brisbane | 15.6% | +0.9pp | $792K |
| Perth | 11.2% | +2.4pp | $698K |
| Adelaide | 8.7% | +1.3pp | $735K |
| Other/Regional | 13.0% | -1.6pp | N/A |
Sources: AFG H1 2026 trading update; CoreLogic Home Value Index May 2026.
Perth’s share of national lodgements has expanded by 2.4 percentage points in two years, reflecting both relative affordability and strong interstate migration. Adelaide has similarly benefited. The shift means lenders and brokers who historically concentrated on Sydney and Melbourne are having to build capability in Perth and Brisbane, where borrower expectations around turnaround times and property valuation differ.
What AFG’s Stock and Strategy Tell Us About the Market Outlook
Australian Finance Group listed on the ASX in 2015 and had a market capitalisation of approximately $1.05 billion as of July 2026. The group has diversified its revenue streams beyond aggregation into the white-label lending (AFG Securities) and technology platforms, which now contribute 14% of segment EBITDA.
Kalkine’s note on AFG highlights several factors that could influence its trajectory in the second half of 2026:
- Net interest margin pressure on white-label book: AFG Securities funds mortgages through warehouse facilities, and its NIM has compressed from 2.1% to 1.7% as funding costs have remained elevated while competition has capped mortgage rates.
- Lodgement growth vs bank branch contraction: NAB, Westpac and ANZ announced a combined 114 branch closures in 2025. Each closure pushes more borrowers into broker channels, structurally lifting AFG’s addressable market.
- Technology investment: AFG’s investment in its CRM platform and digital verification tools has reduced broker lodgement-to-settlement times by 22%, which supports volume throughput even if the number of brokers remains stable.
Q: Is AFG a bellwether for Australian bank mortgage books?
Yes, but with a caveat. Because AFG represents such a large slice of the broker-originated flow, its data is directionally aligned with major bank mortgage growth a few weeks later. However, AFG’s mix has a slightly higher weighting toward non-bank and second-tier lenders than the broader market, so its average interest rate and LVR metrics can run 5–10% above major-bank averages. Analysts at Kalkine note that watching AFG’s variable-rate share and refinancing rate provides an early signal of NIM pressure across the banking sector.
Key Risks and Regulatory Watchpoints for 2026
Several policy and regulatory developments are relevant to Australian mortgage trends this year:
- APRA serviceability buffer: The buffer remains at 3.0%, unchanged since 2022. If APRA reduces the buffer to 2.5% — as industry bodies have lobbied for — AFG would likely see an immediate uptick in borrowing capacity of 7–9%, particularly among first-home buyers. No change has been confirmed as of July 2026.
- Buy-now-pay-later reporting: From January 2026, comprehensive credit reporting (CCR) fully captures BNPL liabilities. AFG brokers report that 5–7% of loan applications are now being declined or downgraded because of undisclosed BNPL accounts surfacing in credit files, a trend that is modestly suppressing loan sizes.
- Federal election housing policies: The May 2026 federal election produced a minority Labor government that has committed to a shared-equity scheme and increased deposit guarantee places. These policies are expected to flow through mortgage channels from Q4 2026 onward.
What Borrowers Should Watch for the Rest of 2026
Based on AFG’s tracking data, several practical takeaways emerge for mortgage holders and prospective buyers:
- If you are coming off a fixed rate in the next six months, start the conversation with a broker at least 60 days before expiry. Many lenders now lock in pricing for 90 days, letting you secure a rate now and activate later.
- Weigh variable offers against the 3-year fixed rate not just on headline rate but on offset availability and break costs. Variable loans with 100% offset accounts remain the preferred structure for owner-occupiers in AFG’s lodgement statistics.
- Investors should reassess interest-only periods: AFG data shows 62% of investment loans written in Q2 2026 included a five-year interest-only term, up from 41% in 2021, suggesting that cash-flow management is being prioritised over principal reduction in an elevated-rate environment.
Q: Should I fix my mortgage rate now or wait for the next RBA cut?
Based on market pricing and AFG flow data as of July 2026, the majority of broker-introduced borrowers are opting to remain variable, because the cost of fixing today (5.79% average) is unlikely to beat the expected variable path if a single 25bp cut materialises. However, borrowers with tight household budgets may value the certainty of fixing, even if it means paying a small premium over the forward trajectory.
Q: How does AFG data compare with official housing finance statistics?
AFG captures lodgements — loans submitted to lenders — while the ABS reports actual loan commitments. AFG data is timelier but slightly more volatile month-to-month. The two series correlate with a 0.91 coefficient historically, and AFG leads the ABS by roughly 4–8 weeks.
Q: Are non-bank lenders growing their share via AFG in 2026?
Yes. Non-bank and second-tier lenders account for 21% of AFG lodgements in H1 2026, up from 18% in H1 2024. This growth is being driven by borrowers with complex income structures or slightly higher LVRs who fall outside major bank credit policies. Non-banks are filling the gap left by tightening serviceability assessments.
References
- Kalkine – AFG: Tracking Mortgage Market Trends Amid Housing Finance Shifts (July 2026)
https://www.kalkine.com.au/ — Kalkine is an ASX-licensed research house providing equity analysis with a focus on small- and mid-cap stocks, including AFG. - Australian Finance Group (ASX: AFG) – H1 FY2026 Trading Update
https://www.afgonline.com.au/investors — AFG’s official investor centre publishes quarterly lodgement data, lending metrics, and management commentary. - Reserve Bank of Australia – Statement on Monetary Policy, May 2026
https://www.rba.gov.au/publications/smp/2026/may/ — The RBA’s sovereign source for cash rate decisions, housing credit growth, and fixed-rate maturity profiles. - CoreLogic – Home Value Index, June 2026
https://www.corelogic.com.au/news-research/reports/home-value-index — CoreLogic is Australia’s leading property data provider; its monthly index is the benchmark for dwelling price movements.
Last updated: July 2026. All data points are as reported by the respective sources and are believed to be accurate at the time of publication.