The nation's largest lender is expecting a boost to its mortgage book this year
Growth in its home loan book this year should boost Commonwealth Bank’s mortgage profit by around 3%, chief executive Matt Comyn said Thursday.
Speaking before a parliamentary committee, Comyn said that CBA, the country’s largest lender, expects to grow its $378 billion mortgage book by about 5% this year as record-low rates pump up demand.
Comyn also predicted that Australia’s strong economic recovery from the COVID-19 pandemic will likely push house prices even higher, Reuters reported.
“We’re anticipating credit growth of about 5% over the course of the year,” Comyn told the committee. “Our forecast for housing (price growth) … I expect it’s probably closer to 10% at this particular point in time.”
Asked whether a 5% increase in CBA’s loan book meant an equivalent hike in mortgage profit, Comyn said factors like bad debt and price-based competition meant profit would be lower, Reuters reported. Asked whether that meant a 3% increase in profit, Comyn said, “It could be in that order.”
“We’ve also seen the highest level of refinancing in the market that I think we’ve ever seen,” he said. Comyn added that business lending growth would be much lower.
With the Reserve Bank continuing to hold the cash rate at a record-low 0.1%, banks have lowered fixed rates to historic lows. The cheap fixed rates have lured many borrowers to the market in order to refinance their mortgages.
CBA reported $3.89 billion in cash profit for the six months to Dec. 31, a 10% drop from the previous year, Reuters reported.