iscover 
Australian Finance Group’s (AFG) Mortgage Index for the first quarter of FY2026–27 (Q1 FY26–27) found the average loan-to-value ratio (LVR) fell to 63.1 per cent, down from 63.4 per cent in the previous quarter and 65 per cent in the same period last year.
The figures came as AFG brokers lodged 36,720 mortgages worth $26.8 billion during the quarter, down 4.5 per cent by value on the previous quarter and 12.4 per cent year on year.
Of these lodgements, AFG also found that upgraders made up a record share.
LVRs fall across most states
The national decline reflected lower LVRs across several states compared with a year earlier, although the latest quarter brought mixed results.
Western Australia recorded an average LVR of 60 per cent, down from 63 per cent a year earlier, while Queensland fell from 61 per cent to 59 per cent.
South Australia’s average LVR was 64 per cent, unchanged year on year, while NSW edged down from 65 per cent to 64 per cent.
Victoria remained at 68 per cent, the highest of the states, while the Northern Territory recorded 63 per cent, down from 71 per cent in the same quarter last year.
Quarter on quarter, however, LVRs rose in NSW and SA, while the NT recorded the largest decline, falling from 68 per cent to 63 per cent.
Average mortgage size reaches new high
Despite the fall in overall lending volumes, the average mortgage size increased to $730,145, up from $727,345 in the previous quarter and $698,438 a year earlier.
NSW recorded the highest average loan size at $819,286, up from $806,189 in the previous quarter.
The Northern Territory saw the largest quarterly increase, with its average loan size rising from $512,529 to $587,217. It remained the lowest of the states and territories.
Queensland’s average loan size edged down to $703,907, while South Australia fell slightly to $684,020. Victoria was broadly unchanged at $694,009, and Western Australia declined from $699,412 to $689,675.
Mortgage volumes ease across states
Total mortgage lodgement value fell from $28.1 billion in the previous quarter to $26.8 billion.
NSW accounted for the largest share of lending, at $8.6 billion, followed by Victoria at $7.8 billion. Both recorded quarterly declines, from $8.7 billion and $8.1 billion, respectively.
Queensland’s lodgement value fell from $5.2 billion to $4.9 billion, while Western Australia dropped from $4.2 billion to $3.8 billion.
AFG said WA’s lending volume had fallen 6.2 per cent year on year, marking its first annual decline after 11 consecutive quarters of growth.
South Australia’s volume declined from $1.85 billion to $1.75 billion, while the Northern Territory was the only state or territory to record an increase, rising from $31.8 million to $35.8 million.
AFG CEO David Bailey said the quarter had been shaped by policy changes, falling house prices and greater uncertainty around interest rates.
“The first quarter of FY27 has been defined by a market coming to grips with government policy changes, falling house prices and a more uncertain interest rate environment. However, as the quarter progressed, we saw early signs of strength and resilience in overall lending activity,” Bailey said.
“One thing remains clear: while market conditions continue to evolve, demand for the support and guidance brokers provide remains strong, positioning the channel to assist Australian borrowers throughout the property cycle.”
Variable-rate lending reaches new high
Variable-rate mortgages accounted for 97.6 per cent of AFG broker lodgements in the first quarter of FY26–27, as the share of fixed-rate lending fell to its lowest level in the index’s history.
The figures showed standard variable loans made up 89.1 per cent of lodgements in the September quarter, up from 87.5 per cent in the previous quarter. Basic variable products accounted for a further 8.5 per cent, taking the combined variable share to 97.6 per cent.
Fixed-rate loans, meanwhile, represented just 1.5 per cent of lodgements, down from 3.8 per cent in the previous quarter and 3 per cent a year earlier.
The latest figures extend a longer-term shift away from fixed-rate lending. Fixed loans accounted for 38.2 per cent of AFG lodgements in the first quarter of FY21–22, before their share declined sharply as borrowers moved towards variable products.
[Related: Consumer confidence hits 30-year lows following rate hike]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.
