Australian Finance Group's Housing Policy Scare Leaves It Cheap and Buying Back Stock

A stellar profit result gave way to a policy-driven sell-off, but an unblemished bad debt record and management buybacks are drawing some fund managers back in.

4 Sep 2026 · 3 min read

Australian Finance Group rode the structural shift toward mortgage broking to a stellar 46 percent profit result in early 2026, before a wave of federal budget changes to negative gearing and superannuation property rules, alongside rising rate expectations, dragged the stock down more than 40 percent from its highs, even as fund managers point to a genuinely unblemished bad debt record and management buying back stock at a cheap multiple.

Riding the structural shift to mortgage broking

Seneca Financial Solutions called AFG's early 2026 result stellar, with profit growth of 46 percent, positioning the mortgage aggregator to benefit from mortgage brokers continuing to gain market share as borrowers increasingly rely on intermediaries rather than dealing directly with the banks, on top of its own lending platform. Endeavor Asset Management said the stock rose 9.6 percent in its March quarter update, with total mortgage lodgements up 22.7 percent and higher-margin securitisation lodgements up 80 percent, as the continued shift toward AFG's proprietary lending products supported expectations for stronger earnings and margin expansion, prompting modest consensus earnings upgrades.

Policy headwinds hit hard

Endeavor Asset Management said the stock fell 22.1 percent in May following consensus downgrades reflecting higher interest rate expectations, and exited its position entirely given federal budget and potential tax changes it believes will reduce confidence around property purchases and overall market activity, planning to wait for a more favourable operating and tax environment. Seneca Financial Solutions said the stock retreated following a Commonwealth Bank result showing rising bad debts industry-wide, though it noted AFG's own track record for loan arrears and bad debts has remained unblemished since it first started lending in 2012, and the company announced a $15 million on-market buyback shortly after. Akambo reduced its stake given broader property market weakness, changes to negative gearing limited to new houses, and a new ban on residential properties inside superannuation funds.

A cheap valuation and management conviction draw buyers back

Datt Capital tipped AFG as a beneficiary of higher refinancing activity, arguing borrowers shopping around to reduce debt repayments in a higher-rate environment would still support broker volumes. By September, Seneca Financial Solutions had topped up its position, describing AFG's latest result as one of the better ones of the reporting season that went largely unrewarded amid broad concern about housing policy changes hitting non-bank lenders, and said it remained comfortable with the outlook after meeting management.

Highlights a conservative 15-year lending track record (roughly $268k of bad debts against a multi-billion-dollar book). Management is comfortable with the outlook and has started buying back stock, alongside recent director buying; trades on ~7x PE with a ~10% yield.

— Seneca Financial Solutions, Presentation, August 2026

What fund managers say they are watching next is whether the negative gearing and superannuation property changes genuinely dent mortgage volumes as some fear, continued growth in AFG's proprietary lending and securitisation arms, delivery of the ongoing buyback alongside recent director share purchases, and whether the roughly 7 times earnings multiple closes as sentiment recovers from the broader non-bank lender sell-off.