Who had it tougher on housing? These stats may put the generational debate to bed.<\/p>\n
“Housing activity has softened from a high base,” CBA chief executive Matt Comyn said in a statement this morning.<\/p>\n
“Application volumes appear to have stabilised in recent weeks.”<\/p>\n
The bank said there has also been a 17 per cent decline in loan application volumes since last year.<\/p>\n
Owner-occupiers versus investors<\/p>\n
CBA’s lending to property investors has suffered a much bigger hit compared to the number of loan applications it has received from owner-occupiers.<\/p>\n
A more detailed breakdown shows investor applications plunged 28 per cent since the federal budget was unveiled on May 12.<\/p>\n
However, owner-occupier applications \u2014 which were not affected by the budget changes \u2014 fell by a much smaller 9 per cent.<\/p>\n
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CBA’s investor lending has fallen 28pc since the government’s May budget. (Commonweatlh Bank)<\/p>\n
Mr Comyn said mortgage activity appeared to be at its lowest in late June, with positive signs emerging from early August.<\/p>\n
Asked how this would affect mortgage credit growth, Mr Comyn said the bank was now forecasting it to settle in a relatively narrow 4-5 per cent range over the year, albeit with some volatility.<\/p>\n
But he noted while there were several factors contributing to a weakening housing sector, he also highlighted Australia’s property market was coming off an unusually strong financial year, when credit growth and investor lending exceeded CBA’s expectations.<\/p>\n
Budget changes, rate hikes hit home loans<\/p>\n
The major lenders have highlighted the decline in the mortgage market since May, as the federal budget was handed down on May 12.<\/p>\n
It contained sweeping changes to Australia’s property taxation rules, including only allowing real estate investors to negatively gear newly built properties.<\/p>\n
But investors who owned existing properties before the budget would still be able to deduct their net rental losses against their wages and other personal income.<\/p>\n
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Three of the big four banks have reported a significant drop in home loan applications. (AAP: Lukas Coch)<\/p>\n
The government also abolished the 50 per cent capital gains tax discount and replaced it with a discount based on inflation indexation, as existed prior to September 1999.<\/p>\n
It has also introduced a 30 per cent minimum tax rate on net capital gains, with the changes meaning people selling investment properties could face more tax under the new regime.<\/p>\n
The May timing of the downturn also reflects three interest rate hikes delivered by the Reserve Bank \u2014 in February, March and May, the latter coming the week before the federal budget.<\/p>\n
CBA is now forecasting interest rates will remain on hold at 4.35 per cent for the rest of 2026, before “a couple of cuts” in 2027.<\/p>\n
Mr Comyn said he expected some buyers to return to the market in anticipation of those lower rates.<\/p>\n
Profit climbs but CBA sees economy slowing<\/p>\n
The Commonwealth Bank’s net profit rose 7 per cent over the year, to $10.87 billion. Cash earnings closed in on $11 billion.<\/p>\n
CBA shareholders will receive a final dividend of $2.70 per share, fully franked, taking the total payout for the year to $5.05, 4 per cent higher than last year.<\/p>\n
Its net interest margin (NIM) was a little lower, down 0.03 percentage points compared to the previous financial year, to 2.05 per cent.<\/p>\n
The NIM captures the difference between the interest that the bank earns from lending money and the interest it pays on deposits.<\/p>\n
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Operating expenses rose 6 per cent to $13.76 billion, which the bank said was driven by “inflation, investment in technology, fraud scams and financial crime, partly offset by productivity initiatives and favourable foreign exchange”.<\/p>\n
Offering his economic outlook, Mr Comyn said “growth is slowing, with higher interest rates and inflation placing uneven pressure on household incomes and economic activity”, evidenced by households consuming fewer goods and services compared to five years ago.<\/p>\n