Commonwealth Bank is the leading lender in the mortgage market, the latest figures showing that the Commonwealth Bank (CBA) holds the largest share in the housing lending market for owner-occupiers and rank second for investor loans. According to the Australian Prudential Regulation Authority (APRA) banking statistics show that in August the Commonwealth Bank had 27% of the entire mortgage market.
Savanth Sebastian, economist for CommSec (Commonwealth Securities, also known as CommSec or ComSec, is Australia’s largest discount stockbroking firm operated by the Commonwealth Bank of Australia) said that statistics also released recently by the Reserve Bank showed that housing credit makes up over 60% of total credit in the market – which is a record high.
“The challenges over the next few months are probably going to be around the Reserve Bank of Australia (RBA) and macro-prudential rules, and what impact it will have on cooling the market. The RBA will be walking a very fine line in terms of how it cools the market without collapsing the market.
“The growth in property investment has been the strongest annual growth we have seen in over six years, but it is more a lack of stock than anything holding more owner-occupiers back and pushing prices up. There are a lot of mortgage brokers who are sitting on clients who have all the pre-approvals, but who can’t find the place they want.
“However, over the next six months we are likely to see a lot more activity taking place with more supply coming on board in the capital cities which will allow more activity and see prices have a much more sedated growth than the excessive growth we have seen over the last 12 months.”
Sebastian says that macro-prudential tools may be the last bit of ammunition left for the Central Bank to curb property investment, as they can’t afford to raise interest rates at the moment given the non-mining sector has not come to the fore in terms of investment. However, there is one other thing, according to Sebastian, that could alleviate the situation.
“The other thing that needs to be considered is foreign property investment – whether there is additional stamp duty or additional fees for foreigners to invest in Australian property. Policies like these will help to cool foreign demand in property which has been a big driver in lifting prices,” he said.