Commonwealth Bank reins in home loan lending

LESS LENDING: There has been reduced growth in the Commonwealth Bank's home loan portfolio.
LESS LENDING: There has been reduced growth in the Commonwealth Bank's home loan portfolio.

New data from the Commonwealth Bank indicating reduced growth in the institution’s home loan portfolio could be viewed as a positive for Tasmania, according to experts.

The CBA’s first half earnings report showed it had reduced exposure to apartment developers by more than $1 billion in the past 12 months, while also reining in loans to property investors.

A dip in Sydney house prices is believed to have played a part in the trend, dropping 3.1 per cent from their peak, after rising 75 per cent between February 2012 and July 2017.

While economist Saul Eslake admitted CBA had a “fairly large presence” in the state’s lending market, he said Tasmania formed a “relatively small part” of the bank’s overall portfolio.

“House prices are still rising in Tasmania, while in Sydney they are past their peak,” he said.

“I don’t think it’s a bad thing if a bank wants to tighten its lending criteria.

“A housing bubble occurs when lenders’ standards are too loose. 

“Australia has, for the most part, been able to avoid the problems seen in the markets of Spain and America that led to the Global Financial Crisis of 2007.”

New Tasmanian home loan commitments reached their highest level in eight years towards the end of 2017, according to the Australian Bureau of Statistics.

Real Estate Institute of Tasmania president Tony Collidge said while it was Australia’s biggest mortgage lender, the CBA was not the only option for home buyers.

“Not only are there three other big banks, but also a range of other alternatives,” he said.

“Institutions such Mystate of Bank of us could step up and fill the void left by CBA, which would be great, given they are based in Tasmania.”