Mortgage aggregator and lender steering more volume to its in-house book as third-party funders retreat
Australian Finance Group (AFG) is increasingly pulling volume away from its white-label arm in favour of its own securitised lending book, as the ASX-listed aggregator and alternative lender leans harder into the higher margins that come with funding loans itself rather than passing them on to an external lender.
The strategy showed up in AFG’s full-year results published this Thursday, which showed group profit rising sharply for the year to 30 June.
Both of AFG's core segments – distribution (i.e. broker aggregation services) and manufacturing (comprising AFG Securities and white-label products) – delivered earnings growth, but it was manufacturing that did the heavy lifting.
Securitisation push accelerates
AFG Securities funds loans directly off AFG's own balance sheet through warehouse facilities and residential mortgage-backed securities (RMBS) issuances, letting the group capture net interest margin rather than a commission. That book grew 30% over the year to a record $7.1 billion, white settlements surged 47%.
White label, by contrast, worked in the opposite direction. These are AFG-branded loans funded by outside wholesale partners rather than AFG itself, and settlements in that channel fell 25% over the year to $1.3 billion, with the loan book contracting 12% to $7.3 billion alongside it.
The retreat of white label reflects a broader shift in who is willing to fund broker-originated loans without their own distribution network. Advantedge – previously the market's largest wholesale funder, backing products including AFG Home Loans Edge – has been progressively exiting new lending, with existing loans transitioning to NAB-branded products through 2026.
That has left AFG's remaining white-label panel, which also includes Macquarie, Adelaide Bank and Pepper Money-funded products, competing for a shrinking pool of volume against AFG's own increasingly aggressive push into its higher-margin loans offerings.
Chief executive David Bailey framed the result as reflecting a business "no longer defined by the near-term housing cycle alone”, pointing to the bulk of group earnings now supported by recurring or diversified income streams rather than upfront residential commissions.
Lodgements soften since Budget
The segment shift comes against a backdrop of a broader slowdown in new lending activity. AFG's own data shows residential lodgements are down 16% financial-year-to-date to 11 August compared with the prior year, with investor activity down 18% and owner-occupier activity down 14%, and the declines sharpest in New South Wales, South Australia and Queensland.
Bailey linked the pullback to the same drivers reshaping the broader mortgage market. "Residential lodgements have softened since June as borrowers respond to changing tax policy settings, interest rate expectations, and household cost pressures," he said. "While this has led to more considered decision-making, underlying housing demand remains intact. A medium-term structural challenge in housing supply remains, and customers continue to need trusted support to navigate an increasingly complex lending environment."
Read more: Investor mortgage applications plunge as Budget tax reforms bite
The trend echoes what AFG said earlier this year, when it reported that lodgements had slipped as rate hikes and the tax overhaul began to bite investors. AFG noted at the time that non-major lenders, including its own AFG Securities book, had continued taking share from the big four even as overall volumes cooled. This trend was also highlighted in Pepper Money’s first-half results, which showed application volumes far outpacing system growth.
Bailey said refinancing, upgraders and client retention are expected to remain important areas of opportunity as borrowers reassess existing loans and compare their options. “In this environment, the broker channel remains structurally well placed,” he said. “Borrowers are increasingly relying on brokers to compare lenders, interpret policy changes and make informed decisions. AFG’s scale, broker relationships, technology and funding capability work together to strengthen the business and support both our earnings growth and our reputation as a market leader.”
