In monthly data released today, the bank says new housing lending (excluding refinancing) pulled back last month, reversing the strength seen in November.
The monthly downturn was sharpest in South Australia and Queensland, while weakness in New South Wales persisted across both owner-occupied and investor lending.
CommBank has not released figures at this stage, pending collation of the bank's quarterly data. However, it provided the graph below:
The bank said almost no new lending in December was at fixed rates.
It seems borrowers are expecting interest rates to fall during 2024, in line with forecasts from the big four banks and market analysts.
Interest rate watch
The Reserve Bank of Australia is set to meet over two days on 5-6 of February for its first meeting of the year.
Last week, National Australia Bank fell into line with its big four peers in expecting the cash rate of 4.35% to remain unchanged in February.
Cumulatively, since the RBA began its hiking cycle in May 2022, 7.5% of new CBA home loans were set at fixed rates.
By comparison, during the first two years of the pandemic, more than 40% of new loans were at fixed rates.
Interest charged and scheduled home loan repayments as a share of CBA’s credit stock rose in December.
This reflected the RBA’s 25 basis point cash rate hike in November which passed through to higher interest charged from December.
The bank said lags generally mean actual repayments take around three months to increase.
Loans for household items up
In other data, CBA reported lending for big ticket consumer items rose further over the three months to December.
Lending for household goods and holidays led the charge while car financing eased slightly but remained elevated, as illustrated below:
Housing lending for renovations has also dropped from its mid-2022 highs.
The flow of savings slowed over 2023. As a share of total housing credit in offset and redraw facilities, the growth in savings during the year was the slowest since the pandemic.
However, the bank says households are continuing to add to offset and redraw accounts given the high opportunity cost of not doing so.
CBA predicts drop in overall lending for December
CBA is forecasting lending in Australia will see a drop across the board in December.
The Australian Bureau of Statistics is scheduled to release its official lending indicators data for December on Friday 2 February.
The market consensus is for an increase in housing lending of 1.6%, but CommBank economist Stephen Wu said CBA was expecting a "very chunky" 4.5% monthly fall.
This follows a modest 1% increase in the official figures for housing lending in November after a robust 5.6% rise in October.
"The data for the end of 2023 has been very choppy overall," Mr Wu told Savings.com.au.
What's ahead for 2024?
In the broader economy, CBA economists are not expecting further increases in the cash rate in 2024 and forecast an easing in the cycle to begin in September.
They have factored 75 basis points of rate cuts in late 2024 and a further 75 basis points of easing in the first half of 2025, taking the cash rate to 2.85%.
On the broader economy, CBA economists are forecasting the 2023 per capita recession will continue until the second half of 2024, although a technical recession is not the bank’s base case.
The bank also expects the unemployment rate will lift to 4.5% by the end of the year. It’s currently 3.9%.
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!