Commonwealth Bank chief executive Matt Comyn has put an age range on the households wearing the rate rises, and a dollar figure on how much interest income has moved around the economy since 2022.
Delivering CBA’s full-year result on Wednesday, Comyn highlighted the recent triple-decker rate rises, adding that the effects have landed unevenly since May 2022.
The effects of inflation and higher interest rates have been substantial, but they have not been evenly distributed. Global shocks and low productivity have led to persistent inflation. As a result, the cash rate has increased 425 basis points since May 2022, and the impact on households has been significant. Compared with five years ago, Australian banks pay an additional $164 billion in interest to depositors and wholesale funding providers, and receive approximately $139 billion more in interest on loans. This represents a significant redistribution of interest income across the economy.
That means interest income that used to stay with borrowers now goes to savers and to the people who fund the banks. Comyn added that CBA alone paid more than $22 billion in interest to Australian savers over the year.
Comyn was specific about where the repayment burden has landed:
The increase in mortgage repayments has been concentrated among households aged approximately 25 to 55. These households are consuming fewer goods and services than five years ago. Our retail offset balances also declined during the half, as some customers drew on accumulated savings.
Mortgage offset balances across the bank rose from $84.97 billion in June 2025 to $96.53 billion in December, then fell to $94.19 billion by June this year. Borrowers spent the first half of the year building a buffer and the second half drawing it down.
Uneven pressure
Comyn said higher rates and inflation are placing uneven pressure on household incomes and economic activity, and that they are doing what they were designed to do:
We saw the peak of house prices in March this year, coinciding with the second of three cash rate rises. These higher rates have the intended effect of slowing household consumption and the economy more broadly.
Chief financial officer Alan Docherty pointed to travel as one of the first places it showed up, saying travel-related spending has been one of the clearer casualties of the rate cycle. He expects that part of consumer spending to stay soft through the rest of calendar 2026.
More pressure on CBA’s loan book
Home loans more than 90 days in arrears reached 0.73%, up 10 basis points over the half. Meanwhile, personal loan arrears rose 31 basis points to 1.72%. The number of home loan customers in hardship increased over the six months, though Comyn said it remains 15% below its recent peak, and the bank set up 147,000 payment arrangements during the year.
To dial down potential panic signals, however, CFO Docherty put those numbers against a longer run of history, shaping it as “seasonal”:
Some of that increase is seasonal. However, there are clearly pockets of customer stress given cost of living pressures and higher interest rates. If we take a longer view, our current mortgage arrears are only five basis points higher than pre-COVID levels, at which time the cash rate was approximately 300 basis points lower.
He said the key variable for consumer credit quality is the jobs market, which he described as in robust condition, and that CBA’s provisioning is far more sensitive to unemployment than to house prices.
CBA’s base case has the cash rate on hold for the rest of this year, followed by a couple of cuts during 2027.
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