Commbank's Ian Narev loses no sleep over Australian property bubble risk
Commonwealth Bank chief executive Ian Narev says he doesn’t lose any sleep over concerns about a possible property bubble in Australia following record low interest rates.
He told a Sydney conference yesterday he doesn’t worry about the consequences of the Reserve Bank’s current policies but says lenders must be "very, very careful about just making hay when the sun shines" to avoid more loans going bad.
“I am absolutely confident that all direct and indirect consequences for the property market that may flow from a change in interest rates are absolutely thought through by the governor and his board,” Narev told the Aussie Home Loans three-day biannual sales conference in Sydney.
“I do not lose a moment’s sleep thinking about that. They think very carefully about a range of issues, they are absolutely aware of what effects different interest rate settings might have on the economy and I’ve got a lot of confidence that they... have a good perspective about that.
He says while people enjoy a lower interest rate environment the bank is aware of risks.
“It's always nice to pay lower interest rates than higher, but interest rates in an economy on a downward cycle are there for a reason.
"History will tell you that when the interest rate cycle starts to rise again… (banks must ensure) people on standard variable rates are going to be able to pay what they need to pay. So sometimes we're seen as the party poopers, but actually it's just that we need to be driving these things for the long term."
Narev says is often questioned by overseas investors on Australia's high house prices compared with incomes, but says banks here could weather double the level of unemployment and a 40% fall in prices.
Meanwhile the National Australia Bank has offered home owners $1000 if they switch mortgages from rival banks amid renewed aggressive competition between the banks.