The number of home loan applications received by the major bank in the week following the federal election hit a six-month high, according to CEO Matt Comyn.
Following his address to the Trans-Tasman Business Circle, CEO of the Commonwealth Bank of Australia (CBA) Matt Comyn revealed that the bank experienced a surge in home loan applications via both the proprietary and broker channel following the Coalition government’s election victory.
“I think, in particular at the moment, quite rightly, there is a strong interest in property,” Mr Comyn said.
“We did have the strongest week in applications that we have seen in more than six months. It did feel – certainly from a demand perspective – there is quite a shift in sentiment.”
The election outcome signalled the defeat of the Labor opposition’s proposed changes to negative gearing and the capital gains tax, which some observers feared would further dampen sentiment in the housing market.
Expectations of a rate cut from the Reserve Bank of Australia (RBA) also heightened following the election, after governor Philip Lowe conceded that the central bank would “consider the case for a rate cut” in June.
Mr Comyn said the bank has revised its monetary policy forecast and now expects an imminent rate cut from the RBA; however, Mr Comyn downplayed its contribution to lifting market sentiment.
“It has an effect but there are other things that have a higher impact,” Mr Comyn added.
“Fiscal stimulus, cuts to taxes, and increases in sentiment tend to have a much bigger transmission effect to the broader economy.”
Further, commenting on the fall in home values, Mr Comyn said that the correction is an overall positive for the broader economy.
“It’s painful for anyone who owns a house and sees the value of their asset or any asset reduce, but I do think it’s a good thing,” he said.
“It’s in the interests of long-term financial stability.”
CBA launches new ‘green mortgage’
During his address, Mr Comyn unveiled a new “green mortgage” initiative, designed to reward “energy-efficient” mortgage holders.
Mr Comyn said CBA plans to pass on the benefits of continued demand for green bonds from investors, by offering $500 cashbacks to mortgage holders who have solar panels installed in their homes.
Commenting on the announcement, Daniel Huggins, CBA’s executive general manager, home buying, said: “We are always looking for innovative ways to support our customers, which is why we are launching this new initiative.”
He added: “We understand many of our home loan customers could reduce their energy volume and usage and pay less or become net positive for energy by investing in energy efficient devices.”
Mr Huggins said the bank is in the process of introducing other initiatives to encourage home owners to make “greener choices”.
“We want to support more of our customers who wish to install small scale renewables by reducing their installation costs and payback periods,” Mr Huggins added.
CBA stated that the green mortgage initiative will be formally launched in the coming weeks.