Housing market to boom even as mortgage deferrals grow from Sydney lockdowns, says CBA

The nation’s biggest lender is confident lockdowns will do little to slow momentum on housing prices.

CBA group executive of retail banking services, Angus Sullivan. Almost 88,000 CBA customers have now accessed home loan support. Picture: Chris Pavlic

Commonwealth Bank is confident of continued strength in the housing market despite hundreds more borrowers requesting relief each day as lockdowns grip much of the nation.

The lender is fielding almost 2000 calls a week from borrowers seeking to defer home loans.

CBA group executive retail banking Angus Sullivan said almost 7000 borrowers had deferred their home loans during this latest period of lockdowns on the east coast, in a “good indicator of the strength of the economy as a whole”.

“We’re relatively comfortable with that the level of demand,” he said.

Almost 88,000 CBA customers have now accessed home loan support, with 60 per cent of calls coming from NSW alone as the state struggles under ever increasing case numbers.

“We can see the overweighting of some of those challenged LGAs in Sydney,” he said.

He noted the data was also skewed towards borrowers working in retail and construction, with the two-week moratorium on construction work in Sydney spurring a spate of calls.

“At the time what we heard was ‘I’m going to be ok for a couple of weeks but if it goes a lot longer than that it’s going to get really tricky for me’,” he said.

Mr Sullivan said the recent imposition of lockdowns in Queensland had seen daily calls spike from its current level of 200 per day.

The Australian Banking Association recently reported on August 6 that 20,000 borrowers had received hardship assistance during the latest lockdowns, including 15,000 who had deferred home or business loans.

The extent of the impact of the latest outbreaks of Covid that have extended to regional NSW and the nation’s capital is unclear.

But ABA chief executive Anna Bligh said banks would continue to offer support to “those doing it tough”.

“Ongoing lockdowns across the country are biting and businesses and families face continued uncertainty,” she said.

“Don’t tough it out on your own, talk to your bank and make use of the support and assistance available. Your bank will help you find a way through this.”

Lockdowns are set to continue across Sydney as cases continue to rise. Picture: NCA NewsWire/Jeremy Piper

However, despite the challenges Mr Sullivan said CBA was confident house prices would lift another 3-4 per cent this year.

He said this would be followed by a moderating price rise of 7-8 per cent next year after the runaway price rises of 2021.

Mr Sullivan said the bank was still seeing very strong demand from owner-occupiers, but recent months had brought a notable uptick in demand from investors.

The lender, which holds 25.3 per cent of the Australian mortgage market, has launched a foray into fast digital banking via the new Unloan product.

Unloan, which offers 10-20-minute mortgage applications, comes as other lenders circle CBA’s hefty loan book looking to peel off safe borrowers with lower rates or frictionless applications.

Mr Sullivan said the bank would take the fight to the housing market with the launch of Unloan, with an eye to expiring fixed-rate loans.

“The customers we’re targeting will be the simpler customer with a normal mortgage, with a good [loan-to-value ratio],” he said.

“A key moment is when your fixed rate expires.”

Record cheap rates have spurred many borrowers to lock into cheap low rate loans.

The trend has turned CBA’s normal split of 90 per cent variable, 10 per cent fixed, to almost 48 per cent of new loans fixed.

Originally published as Housing market to boom even as mortgage deferrals grow from Sydney lockdowns, says CBA