Westpac narrows gap on Commbank while dismissing housing bubble claims

Westpac consumer banking boss George Frazis says the Australian housing fundamentals remained strong.

Westpac has a $363 billion exposure to mortgages, with the bank having strengthened lending standards by lifting serviceability buffers and writing fewer loans with large leverage, he advised this week.

He dismissaed the US research house Variant Perception report last month that claimed Australia had “one of the biggest housing bubbles in history” and prices would fall 50 per cent in parts of Sydney and Melbourne.

“Hedge funds have been making those allegations for 20 years,” he told The Australian, claiming offshore funds “don’t understand the Australian mortgage market”.

“Basically we’ve got an environment where we’ve got responsible lending obligations (and) the incentives are aligned between the borrower and the bank to ensure effectively we do whatever we can to make sure people stay in their homes.

“We’ve got ... one million-plus customers; at the moment we have in the order of about 250 houses in repossession, so an extremely low number."

He said 74 percent of Westpac customers are ahead on their repayments.

“We’re actually breathing down the neck of Commonwealth Bank, we’re closing the gap on mortgages and we’ve stopped the gap growing in deposits, which I’m really pleased about,” he said.