Finance
Commonwealth Bank, Australia’s biggest lender, says home loan demand is too high
SYDNEY, Nov 18 (Reuters) – Commonwealth Bank of Australia (CBA.AX), opens new tab, 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 said on Tuesday.
While admitting the bank benefitted from the surge in housing credit growth, Comyn said a lower level would be better for “long-term financial stability, equality and access to the housing market.”
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“Our view would be that a more sustainable credit growth rate in housing would be slightly below the current level,” he told lawmakers at a committee hearing in Parliament.
“I think that’s probably pushing a higher level than perhaps policymakers and regulators might be ultimately comfortable with.”
“Obviously we benefit as an institution where housing credit is higher.”
The latest figures from the Australian Bureau of Statistics showed the total number of new loan commitments for dwellings rose 6.4% in the third quarter from the second quarter.
Total housing credit growth has risen above the post-global financial crisis average, largely driven by an increase in investor credit growth in response to lower interest rates, according to the Reserve Bank of Australia.
Australian lenders have also been expanding their mortgage books over the last year, led by CBA, with 6% growth to A$664.7 billion ($431 billion) in the financial year that ended on June 30. Other banks reported growth of about 5% for their financial years that ended on September 30.
But Comyn said demand for housing could moderate as there was “much less confidence that rates will be reducing anytime soon.”
He said the bank expected that the cash rate would remain unchanged at 3.6% “more likely than not” through 2026 because inflation was too high.
Reporting by Christine Chen and Scott Murdoch in Sydney; Editing by Thomas Derpinghaus
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