$31 billion in CBA mortgages exposed to extreme weather risks

A chilling report has revealed hundreds of thousands of Aussies risk having their home valuations slashed due to “extreme” events.

There is a staggering $31 billion worth of mortgages with the Commonwealth Bank where owners’ homes are exposed to “extreme” weather events, a new report has revealed.

The analysis from the CBA and CSIRO found that around $31.2 billion in home loans were in areas “exposed to increasing risk such as cyclone-exposed coastal regions, low-lying flood plains and rural areas in close proximity to the urban fringe”.

Drilling down, it said there were 38,000 properties with mortgages worth a combined $11 billion at high risk of exposure to cyclones, while 56,000 properties equalling $19 billion in home loans are at risk of floods and 5000 with $2 billion in mortgages are at risk of fire.

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Damage from cyclones, fires and floods will rise. Picture: 9 News

The 60-page report, which was the bank’s first climate analysis, also found that there were $14 billion in mortgages centred in communities that rely financially on coal at a time when demand is expected to plummet.

“As changes to the climate accelerate, Australia is likely to see more frequent and more severe weather events such as droughts, floods, bushfires and storms,” the bank’s CEO Matt Comyn and chairman Catherine Livingstone said.

“These are some of the physical risks of a changing climate with the potential to impact economic productivity and community wellbeing.”

Commonwealth Bank CEO, Matt Comyn. Picture: Supplied

In a chilling warning, the report predicted increases in cyclone, flood and fire risks by 2050, with populated areas that have never been hit by cyclones particularly at risk, including in parts of NSW.

“If this happened in the north of NSW, where construction standards have not been designed to resist cyclones, material losses could be observed which are not currently reflected in our current estimates,” the report noted.

It also assessed the bank’s exposure to its home loan portfolio in areas with mines and ports and found $14 million worth of mortgages could be hit with plunging prices.

“The concentration of a local area to the fossil fuel value chain increases the risk that indirect employment and broader economic value, including residential property values in these regions, is reduced as a result of a significant reduction in global coal demand,” the report said.

A total of 56,000 properties equalling $19 billion in home loans are at risk of floods. Picture: Dan Peled/NCA NewsWire

CBA currently holds around $556 billion in mortgages in Australia and is the country’s largest home lender.

The Reserve Bank of Australia has also warned that homeowners could see the value of their properties drop dramatically as a result of climate change and wild weather, which would also leave banks in a difficult position of recouping losses if someone was to default on their loan.

It identified 3.5 per cent of properties across Australia that were at “high risk” from climate damage.

A recent study found more than half a million Australian homes will be deemed ‘uninsurable’ by 2030 as worsening weather wreaks havoc on the nation.

The figures, which show one-in-25 homes at high risk, increase to more than one-in-10 homes in some of Australia’s most vulnerable regions, including parts of Brisbane, Ballina, the Gold Coast and Port Adelaide.

There are 5000 homes with $2 billion in mortgages are at risk of fire with the CBA. Picture: Tony McDonough/NCA NewsWire

Many Australians would not think to research climate impacts when considering dropping millions on their dream property – but this could be a very costly mistake.

Long considered a problem to be dealt with in the future, the impacts of climate change are happening now – something the latest Intergovernmental Panel on Climate Change (IPCC) report makes clear – and homeowners buying their properties today could be forced to deal with these issues by the time they’ve paid off their mortgages.

It’s not just those living in million-dollar homes by the water who could be at risk, with climate change also expected to worsen flooding around urban creeks and from stormwater drains.

Disturbingly many of these impacts are not being made clear to potential homebuyers, who are forced to scour planning documents and climate modelling websites to understand how they may be impacted by things such as flooding, coastal inundation, fire and cyclones.