Aggregation boss delivers sharp words on government policy, a cooling market and first-home buyers as annual conference kicks off in Melbourne
Australian Finance Group (AFG) chief executive David Bailey has used his opening address at AFG Next 2026 to sketch a mortgage market under strain – squeezed households, shifting government policy, and investors who now read his company's share price as a gauge of the whole sector.
Speaking to a packed room of brokers at Crown Melbourne on Tuesday, Bailey said global and domestic pressures were now reaching Australian households directly. "It's the price of bread, it's the price of fuel. It's the uncertainty that's driven through business," he said, also pointing to recent elections in New Zealand, Israel and the United States. "And so what this has been driving is a sense of constraint and a sense of uncertainty in the marketplace."
AFG has not been immune. The aggregator's shares had been sliding since 13 May, the day after the federal Budget, despite strong earnings-per-share (EPS) growth.
"As an executive of a listed company, that's mildly concerning," Bailey admitted. "We've just delivered a result which had 30% EPS growth, we've got a strong balance sheet, cash flow generating, and 90% of our income is effectively underpinned by the things we've done in terms of diversifying our income. But … I would call it, we are a bellwether for the mortgage market."
He continued: "And that bellwether for the mortgage market means that people will say, ‘I'm out of mortgages, I'm out of the residential, I'm out of this’. (But) what we've seen over the journey is these things do return. The market will return."
His message to the room of brokers was to use the softer conditions to prepare for the upturn. "It's now that you need to buckle down and make some decisions around how you're going to survive and how you're going to invest in (your) business to make it a bigger, stronger business moving forward.”
Upgraders drive half of AFG's mortgage flow
Upgraders – existing owners with equity who are moving to a different home – have become the engine of AFG's mortgage book. Their share of the aggregator's flow has climbed from about 42% to close to 50%, per AFG's latest Mortgage Index.
"The big change that we've seen through our data is we've seen the upgraders come in," Bailey said. "They're the customers that sit there and say, ‘well, I've got equity in my house, I've been through this cycle before, I want to move to that suburb down the road. If I don't move now, maybe the price will start rebounding again and I'll miss out on my opportunity’."
That shift is helping brokers hold their pipelines steady, even as AFG lodgements slip as rate hikes and tax changes bite investors.
Investors down, but not decimated
Speaking of which, investor lending has fallen to about 30% of AFG's flow, against a long-term average of around 37%. But Bailey stressed the segment had weakened without collapsing.
"The market is off, but it hasn't been decimated at this point in time, and we're not expecting that to happen," he said.
The figures track the wider slowdown in investor mortgage applications since the Budget tax reforms took effect.
Why refinancing is set to rise
Refinances currently account for 15% to 16% of AFG's flow, but Bailey expects that to return to 20 to 25% over the next two to three months as rate changes push borrowers to question their deals.
"We always see that when there's a change in mortgage rates. Customers say, 'am I on the best deal? Am I getting the best deal?' And that reverse inquiry back to the broker seems to start to lift," he said.
But he cautioned that the lift was unlikely to arrive before Christmas, as households get caught up in the rush to the holidays. Other aggregators are already seeing the turn, with refinancing hitting a record high at Loan Market Group in late September.
First home buyers unmoved by Canberra's 'change of positions'
Bailey reserved his sharpest words for government policy. He said a run of policy reversals had been aimed at first home buyers, yet AFG's data showed the segment had not moved – still 12% of the aggregator's flow.
"All of these changes, all this change of positions, was really driven around first home buyers. How do we bring them more into the marketplace? Our data says that hasn't moved," he noted.
Bailey put the hesitation down to price expectations. "Why would I buy now if house prices are going to fall down?" he said, describing the thinking of a would-be buyer. "They're particularly sensitive to falling house prices, particularly with a first mortgage."
Earlier, Bailey had expressed frustration at the government's habit of shifting its stance, offering it to parents in the room as a new excuse: "I did say you'd get pocket money of $40 a week, but I've changed my position."
The joke carried a harder point. "It just feels as if there's this war on success. People trying to get ahead and they seem to be dragged back by policy and … changing position from the government, which is contrary to where we thought we would be a while back. And that impacts our customers, it impacts our businesses, and it's something we've got to work through."
He then checked himself. "I'm going to get on a high horse now and start talking about politics, and I think I should avoid that."
Inside AFG Next 2026
AFG Next is running from 9 to 12 November in Melbourne, with conference days at Palladium at Crown on 10 and 11 November. The aggregator is billing it at about 900 delegates, more than 20 speakers, six breakout sessions and 30 exhibitors.
Actor Shane Jacobson is master of ceremonies. Keynote speakers include four-time Olympic swimming champion Ariarne Titmus OAM, Four Pillars Gin co-founder Stuart Gregor, Nine News finance editor Chris Kohler, and Tracy Hall, who speaks on fraud and financial resilience. Mental health expert Mitch Wallis, Good Citizens Eyewear founders Nik and Harry Robinson, and innovation speaker James O'Loghlin round out the line-up.
Breakouts cover AI for business owners with Adam Franklin, personal branding with Carlii Lyon, and a live BrokerEngine demo. AFG's broker investments team, Vik Sukumaran and Jordan Collins, will run a session on growth, succession and business value. Commercial and asset finance brokers have a dedicated afternoon stream, including an economic update from ANZ senior economist Jasmine Zheng.
The conference closes with a gold-themed gala dinner at Centrepiece Melbourne on 11 November. Brokers who attend the full program receive 18 continuing professional development (CPD) points recognised by the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA).
