CANBERRA, AAP – The head of Australia’s largest retail bank is concerned about possible mortgage stress in the future as a result of a heated housing market.

Commonwealth Bank of Australia CEO Matt Comyn told federal politicians he is not particularly concerned about the current state of the mortgage market.

“But in terms of increasing housing debt and increasing housing prices we are increasingly concerned,” he told the House of Representatives economics committee on Thursday.

“We think it would be important to take some modest steps sooner rather than later to take some of the heat out of the housing market.”

He said the housing market has proved resilient and robust, even during the lockdowns in the nation’s two major states, NSW and Victoria, and is not seeing a slowdown in mortgage applications.

“As we have seen in other markets, New Zealand being a good example … it is much harder to act when the market is accelerating versus taking interventions to try to avoid too much of an acceleration,” Mr Comyn said.

He said CBA has raised its servicing capability rate on mortgage applications to 5.25 per cent, well above the interest rate a customer would currently pay.

“We all would have a shared concern about making sure Australia’s households are in a strong position to continue to pay, and also to support consumption in the broader economy in the second half of this decade if interest rates are rising, and potentially rise more quickly,” he said.

Financial regulators, such as the Reserve Bank of Australia and the Australian Prudential Regulation Authority, have been monitoring developments in the housing market, but have so far been satisfied that lending standards have not deteriorated.

“The best regulation is self-regulation, so we shouldn’t be entirely dependent on being instructed by the regulator,” Mr Comyn said.

The hearing is part of the committee’s regular check-up with the country’s big four banks.

ANZ will face the committee later on Thursday. National Australia Bank and Westpac appeared earlier this month.