Broking industry, banking giants pitch housing crisis fixes

Australia's biggest mortgage lenders fronted the final hearing of the Senate Select Committee on Intergenerational Housing Inequity in Canberra today, as evidence mounted that younger, indebted borrowers are absorbing the brunt of the pain from three interest rate rises this year.

The eighth and last public hearing of the Greens-initiated inquiry, which must report to the Senate by 30 September, drew bank executives, the Reserve Bank of Australia (RBA), unions and the Mortgage & Finance Association of Australia (MFAA) into direct contest over who bears responsibility for locking younger Australians out of home ownership.

Rate rises hitting younger, indebted borrowers hardest

RBA deputy governor and chief economist Sarah Hunter told the committee "monetary policy is a blunt tool" but insisted it remains effective at bringing down inflation, which sat at 3.5% in July – still above the RBA's 2-3% target band.

The cash rate has risen from 3.6% to 4.35% across three hikes this year, reversing 2025's rate cuts and sending interest rates across the Australian lending landscape soaring.

Hunter told the committee Australian households broadly split into three groups – renters, indebted owner-occupiers and those who own their home outright – and that the "cash flow channel" through which rate rises are meant to slow the economy falls almost entirely on the middle group.

That divide tracks closely with age: Finder's 2026 Home Loan Report found 66% of Baby Boomers say rate rises don't affect them because they carry little or no debt, compared with only around a quarter of Gen Y and Gen Z borrowers – with about a third of younger Australians cutting spending on essentials like food and utilities to keep up with repayments.

Roy Morgan data has separately estimated the RBA's tightening cycle has pushed the share of borrowers "at risk" of mortgage stress to 30.4%, or roughly 1.64 million people.

As for renters, Hunter stopped short of blaming monetary policy for rising stress among this cohort, noting rents are also driven by local supply and demand. But she described some of the mortgage-stress accounts put to the committee as "quite harrowing."

CBA rebuked

Commonwealth Bank executive general manager for retail Robert Parker faced a tense exchange after he was unable to tell the committee what proportion of CBA's profit comes from owner-occupier lending, despite the bank receiving the committee's questions in advance.

Pocock told Parker "we're in a housing crisis" and pushed him to explain why he had not come prepared with figures on the bank's 30-year loan profitability and its margin split between owner-occupiers and investors; Parker ultimately took the questions on notice.

The scrutiny follows a run of results confirming a sharp pullback in home lending since May's federal budget, which wound back negative gearing and capital gains tax (CGT) concessions for property investors.

CBA, NAB and Westpac have each reported application declines of between 15% and 20%, all the while netting record profits.

Westpac chief economist Luci Ellis revealed to the committee that the bank's consumer division, which includes home lending, generated $2.3 billion of its $6.9 billion FY24-25 profit – roughly a third of the total – but did not break out how much came from mortgage interest specifically.

An 'unjust' system

ACTU assistant secretary Joseph Mitchell told the committee Australia's housing system had become "unjust”, pointing to the decline of public housing and arguing home ownership had been "turned into a speculative investment by professional landlords”.

ACTU senior economist Thomas Greenwell went further, telling the committee that CGT settings mean whether someone can buy a home increasingly comes down to "whether or not your parents are wealthy".

MFAA points to friction, not greed, as the barrier

MFAA chief executive Anja Pannek (pictured, top of page) and executive – policy and legal Naveen Ahluwalia also appeared before the committee.

In a prepared speech, Pannek framed intergenerational housing inequity as a problem of friction: slow credit assessment, government schemes that are hard to access through the broker channel, low housing mobility and inflexible regulatory settings.

Referencing the MFAA's written submission lodged with the inquiry in May, Pannek said: "Australia needs more housing supply, a competitive lending market, and government home ownership initiatives that work effectively in practice.

“Our submission focuses on one part of the broader challenge: how Australians access and navigate the home lending system. Changes to lending rules will not make housing more affordable on their own, nor are we advocating weaker responsible lending standards or greater borrowing capacity as a substitute – our point is narrower.

“When someone can sustainably afford home ownership, unnecessary complexity, duplication, or inflexibility in the lending system should not prevent or delay them."

That submission sets out four recommendations:

• Reducing friction in accessing home loan credit

• Simplifying government home ownership schemes

• Improving housing mobility

• Introducing more flexible regulatory settings, including broader Consumer Data Right (CDR) access and more forgiving serviceability buffers for borrowers refinancing to cheaper loans

What happens next

The committee must table its final report by 30 September.

For brokers, the outcome could shape everything from CDR access to how schemes such as the 5% deposit scheme are administered through the broker channel in future.