Australia's Biggest Bank CEO Sounds Alarm: Home Loan Surge Threatens 'Uncomfortable' Housing Stability

The head of the Commonwealth Bank of Australia, Matt Comyn, warned that housing credit is expanding at an unsustainable pace, driving continued increases in home prices and posing risks to both affordability and financial stability over time.

During a parliamentary committee hearing on Tuesday, Comyn acknowledged that the pace at which housing credit is expanding is higher than what regulators or policymakers might ultimately consider sustainable. Comyn indicated that a more desirable pace of lending growth would be somewhat slower than what is currently being recorded. He noted that housing credit is expanding by roughly six percent a year, with investor-related borrowing rising even faster.

Although elevated housing credit boosts CBA’s earnings—its mortgage book increased by roughly six percent to A$664.7 billion as of the financial year ending June 30—Comyn emphasized that moderation would better support a fair and accessible housing market. Recent data from the Australian Bureau of Statistics reflects this strong momentum, with new residential loan commitments rising 6.4 percent in the most recent quarter. According to the Reserve Bank of Australia, much of the current strength in housing credit above post-GFC norms has come from investor activity.

Comyn also commented on the outlook for borrowing demand. He expects some cooling if confidence fades around the prospect of interest-rate cuts, which the bank does not anticipate until at least 2026. With inflation remaining stubbornly elevated, CBA forecasts the cash rate to hold near 3.6 percent for an extended period, a scenario that would likely restrain new borrowing. He added that borrowers with minimal deposits can be more exposed to repayment difficulty, though employment changes remain the most common trigger for mortgage stress, followed by health and relationship issues.

Beyond the housing market, the hearing addressed broader issues affecting the financial sector. Comyn argued that stringent capital requirements limit banks’ ability to compete, pointing to the need to hold significant capital buffers—roughly A$15,000 for every A$500,000 loan—as an example of the constraints on profitability. He also urged lawmakers to create a more level regulatory and tax environment for large U.S. technology companies operating in Australia, contending that these firms often compete across multiple industries, including finance, without contributing proportionally to the national tax base.