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AFG CEO David Bailey has revealed that the aggregation group recorded its highest ever lodgement volumes in October, as the proportion of broker-written loans hits new highs.
Following on from figures showing record mortgage activity and broker market share hitting a new high, the chief executive officer of the Australian Finance Group (AFG), David Bailey, told shareholders that the aggregation group had also seen record highs recently.
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Speaking at the annual general meeting (AGM) on Friday (27 November), Mr Bailey revealed that the aggregator had continued to see record-high results.
He said: “Lodgement volumes for October exceed $6.7 billion. This is the highest figure the company has ever recorded and represents a 16 per cent increase from October last year.”
Perhaps reflecting the minimal restrictions in Western Australia and Queensland, Mr Bailey revealed that Western Australia saw the largest percentage increase in volume, with AFG broker lodgements for this state increasing 41 per cent from the same period last year.
This was followed by Queensland with a 30 per cent increase.
Lodgements by AFG brokers for South Australia also increased (25 per cent), as did those in NSW (7 per cent) and Victoria (11 per cent), as it started to ease out of its restrictions.
“As brokers have navigated the challenges of this period of market disruption, their role as a trusted support for their customers has meant they have continued to deliver competition among lenders and choice to our customers across the country,” Mr Bailey said.
He told The Adviser that he believed several different factors had combined to create this record broker lodgement activity.
“A lot of the bank branches that were closed temporarily at the beginning of COVID-19 still haven’t opened, so that has driven a lot of transactions to this channel.
“Also, whenever there’s talk of interest rates and interest rate changes – for example RBA changes – it drives a greater level of inquiry to brokers, because people want to make sure they are getting the best rate.
“The other piece is even in this strange market, where despite the pandemic, those who can afford to and want to undertake transactions are wanting to do it. And we’re certainly seeing that with the upgraders who have been consistently stronger than most people, anticipated back in March, April.”
Indeed, the AFG CEO revealed that as well as upgraders (those wanting to move to a larger home), first home buyer (FHB) loans written by AFG brokers had increased to 23 per cent in October, up from 15 per cent in the same period last year.
Mr Bailey said that major lenders had been dominated in this segment, capturing 65 per cent of FHB loans written by AFG brokers in October.
He added that the “refinance boom” that had been seen earlier this year now appears to be dying down to “more traditional levels”, dropping from a peak of 38 per cent in April 2020 to 21 per cent in October.
“This is a decrease year-on-year from 26 per cent in October 2019,” he said.
Overall, AFG said the average loan size is flat compared with October 2019.
Noting that broker market share as a channel had now surpassed 60 per cent, according to recent MFAA figures, Mr Bailey concluded: “It’s a fantastic achievement, and I think it’s reflective of something we’ve been saying – and what brokers have been saying – for a long time: customers are accessing brokers because of the competition, the choice and the convenience that it provides.
“At a time when customers are looking for solutions and looking to ensure that they get the right deal and the most appropriate outcome, brokers are proving their worth in the marketplace,” he told The Adviser.
At the AGM, Mr Bailey also outlined that the proposed merger with Connective Group was still awaiting a decision from the courts regarding the satisfactory resolution of one of the non-customary conditions.
Mr Bailey told The Adviser that the court hearings were being held in Melbourne and he believed the lockdown may have contributed to a delay, adding: “There’s not much more I can add other than it is still a strategic part of our growth plan, and we’re looking forward to trying to close that transaction out as quickly as possible. But, clearly, it was a non-custom reconditioning we put on at the start and we’re still waiting for the resolution or decision on that court case.”
[Related: Aussie posts record October loan settlements]
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