Commonwealth Bank (CBA), the country’s largest lender, believes demand for home loans is too high and is helping to push property prices up, Chief Executive Matt Comyn (pictured) said on Tuesday.
He told lawmakers the bank benefits from strong housing credit growth, but a lower rate would be better for “long-term financial stability, equality and access to the housing market," Reuters and Yahoo Finance reported.
“Our view would be that a more sustainable credit growth rate in housing would be slightly below the current level,” he said during a parliamentary hearing.
“I think that’s probably pushing a higher level than perhaps policymakers and regulators might be ultimately comfortable with.”
ABS data shows the total number of new loan commitments for dwellings rose 6.4% in the third quarter from the second quarter.
The Reserve Bank has noted that total housing credit growth has climbed above the post-GFC average, largely driven by increased investor activity in response to lower rates.
CBA expanded its mortgage book by 6% to $664.7bn in the year ending June 30, outpacing other major banks, which reported roughly 5% growth.
However, Comyn said demand may moderate as expectations for rate cuts are pushed out.
He told lawmakers the cash rate is “more likely than not” to remain at 3.6% through 2026 because inflation is still too high.
Investor lending remains a growing concern.
Green Senator Barbara Pocock called on APRA to intervene, saying the rise in credit demand—especially from investors—must be “curtailed” to improve affordability, Yahoo Finance reported.
“Australia needs to get back into the business of giving loans to owner occupiers rather than property investors,” Pocock said.
Comyn said loss rates remain “very low” thanks to tight labour-market conditions.
“So if there’s a change in unemployment that would make big differences,” he said.
At present, 85% of CBA mortgage customers are ahead on repayments, providing a buffer if rates stay elevated for longer.
Comyn warned MPs about structural pressures shaping the economic outlook, including geopolitical instability, digitisation, AI adoption, decarbonisation and demographic shifts.
“There are some fundamentally different structural forces at play… How all of these forces actually combine are giving us a lot of thought and also consternation,” he said.
He emphasised the need for strong capital buffers across the banking sector.
Comyn pushed back at suggestions that major banks enjoy “super profits.”
“This view that banking is very concentrated… and therefore super profits are being earned is a narrative we have done a poor job of countering,” he said.
Banks must generate sufficient profit to meet capital requirements.
“For every $500,000 loan, the bank will set aside $15,000, but if the person repaying the loan falls behind, the bank has to up that rate to more than $100,000,” Comyn said.
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