Australia’s biggest lender, Commonwealth Bank of Australia (CBA), has issued a rare warning about the country’s housing market, saying demand for home loans is rising at a pace that is becoming difficult to sustain. The bank’s chief executive, Matt Comyn, said the rapid growth in mortgage applications is putting pressure on approval systems and could worsen affordability challenges across the country.
CBA, which controls roughly a quarter of Australia’s mortgage market, reported that a wave of new borrowers is entering the housing market despite elevated interest rates and higher living costs. Comyn noted that while strong demand typically signals economic confidence, the current surge is “too high” for a market already facing limited housing supply and surging prices.
Industry analysts say Australia’s housing market has resisted broader economic slowdown trends. Even as households feel the strain of rising rents, inflation, and steep mortgage repayments, property prices have continued to climb. Low housing supply, population growth and investor activity remain major drivers of this trend. CBA’s concerns highlight growing fears that affordability could deteriorate further if loan demand continues at the current pace.
The bank’s comments arrive as financial regulators monitor lending standards closely. A rapid rise in home loan volumes can pressure banks to speed up processing times, which raises the risk of overlooked assessments or riskier approvals. Comyn emphasized that the bank intends to maintain strict lending processes, even if it means slowing down approvals during peak demand.
While demand for loans is accelerating, interest rate relief may still be months away. The Reserve Bank of Australia (RBA) has kept rates higher for longer to combat inflation, and many borrowers remain on the edge of financial stress. Higher mortgage rates have pushed household budgets to their limits, yet home ownership continues to be a priority for many Australians.
CBA also highlighted that borrowers are increasingly competing for fewer available properties. The supply shortage has intensified bidding activity and pushed prices upward in major cities including Sydney, Melbourne and Brisbane. Some buyers are reportedly attempting to lock in loans ahead of any potential market cooling or rate changes in 2025.
Economists warn that rising loan demand against a backdrop of restricted supply could widen the affordability gap, especially for first-time buyers. The struggle to enter the market is deepening as prices outpace wage growth, creating concerns about long-term housing access.
Despite the pressure, CBA’s financial performance remains strong. The lender continues to benefit from higher interest margins and its dominant position in the mortgage sector. However, Comyn stressed that sustainable lending practices are more important than short-term growth, especially in a sensitive economic environment.
The bank expects demand may ease if supply conditions improve or if economic uncertainty increases next year. For now, CBA is urging policymakers, regulators and the construction sector to accelerate efforts that increase housing availability, which remains one of the biggest constraints in the market.
Australia’s housing debate is intensifying, and CBA’s warning reinforces a growing concern: loan demand is rising faster than the country’s ability to build homes or support new borrowers. Unless conditions change, affordability pressures could continue to shape the market in 2025.
Related News : New Zealand Central Bank to Loosen Home Loan Rules from December
