CBA chief rejects housing market warning

Even if the Reserve Bank did not move interest rates, he stressed this was only one influence on banks’ mortgage pricing decisions. “We’ve always said that the Reserve Bank rate is one input into the cost of funds, which are one factor into the pricing," he said. "You’re going to see more of that link being challenged, with different products happening, fixed versus floating, different specials here and there.

Commonwealth Bank chief executive Ian Narev has hosed down warnings that Australia‘s housing market is a systemic risk to the economy, and predicted banks would continue to aggressively target the $1. 3 trillion mortgage market.

Housing defaults tended to come later when unemployment rose. "History will tell you that if you look back at the early 1990s, the first thing that goes is institutional credit quality, that takes a bath, and then small and medium enterprise credit takes a bath, and then after that housing takes a bath," he said. “The question I think we’ve all got to think about … is a lot less, is it home lending versus business lending?

Mr Murray has said that one way to contain the "systemic risk" of housing loans is for banks to hold larger loss-absorbing capital buffers, triggering investor concerns this could dampen dividend growth.

Read more here: SMH


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