HIGH RISK: $61.9 Billion on Watch: 1 in 13 CBA Mortgages Flagged
$61.9 Billion on Watch: 1 in 13 CBA Mortgages Flagged as Higher Risk
Source: realestate.com.au (reporting on Commonwealth Bank of Australia Half-Year Report to 31 December 2025 and ABS data)
One in 13 mortgages held by Commonwealth Bank are currently flagged as higher risk, representing approximately $61.9 billion in loans under closer monitoring. The data, disclosed in CBA’s half-year report to 31 December 2025, provides rare visibility into how Australia’s largest lender segments credit risk across its home loan portfolio.
Higher-risk loans (Stages 2 and 3) account for 7.5% of CBA’s total mortgage book, a level that has remained steady since 2024. Notably, the most concerning segment — Stage 3 non-performing loans — represents less than 1% of total home loans, while arrears have actually fallen by 0.07%, and 87% of borrowers are ahead on repayments. This indicates that while risk monitoring is elevated, systemic stress remains contained.
At the same time, mortgage lending continues to expand nationally. ABS data cited in the article shows $108.3 billion in new home loan commitments in the December 2025 quarter, including $43 billion in investor lending (+7.9%)and $19.3 billion for first-home buyers (+15.5%), highlighting strong credit demand despite tighter oversight.
CBA Mortgage Risk Breakdown
Portfolio Segmentation (as at 31 December 2025)
Stage 1 – Performing loans: $762.8 billion
Stage 2 – Higher-risk performing loans: $54.3 billion
Stage 3 – Non-performing loans: $7.6 billion
Stage 2 + 3 combined: ~7.5% of total mortgage book
Impairment Provisions
Stage 1: $1.01 billion
Stage 2: $656 million
Stage 3: $408 million
Half-year impairment expense: $319 million
Borrower Metrics
Arrears fell by 0.07%
87% of borrowers ahead on repayments
National Lending Data (December Quarter 2025 – ABS)
Total new home loan commitments: $108.3 billion
Investor loans: 60,445 (+5.5%)
First-home buyer loans: 31,783 (+6.8%)
Average FHB loan size: $607,624
Average investor loan size: $716,711
Investors wrote almost double the number of new loans compared to first-home buyers during the quarter.
Regulatory Context
From 1 February, the Australian Prudential Regulation Authority (APRA) imposed new limits on high debt-to-income (DTI) lending. Under the rule:
Up to 20% of new mortgage lending may have a DTI ratio ≥ 6 times income.
The measure aims to “manage the possible build-up of risk in housing credit” and strengthen household resilience.
APRA described high-DTI lending as “trending up,” prompting the introduction of formal guardrails.
Cost Pressure Indicators
According to Compare the Market’s economic director David Koch:
Monthly repayments on an average $736,000 loan reach $4,037 at a rate of 5.19%.
Borrowers face rising insurance premiums, grocery costs, energy bills and rental costs.
These pressures sit alongside rising loan sizes, increasing repayment sensitivity even at competitive rates.
Supply vs Demand Signals
The article’s data reflects a housing finance system characterised by:
Strong lending volumes
Stable but elevated risk monitoring
Investor demand materially outpacing first-home buyer participation
With Stage 3 loans below 1% and arrears declining, credit quality remains stable. However, the presence of $61.9 billion in monitored higher-risk loans suggests lenders are proactively managing exposure in a high-debt environment.
Snapshot Table
MetricFigureMortgages flagged higher risk1 in 13Value monitored$61.9 billionStage 1 loans$762.8 billionStage 2 loans$54.3 billionStage 3 loans$7.6 billionNew lending (Dec quarter)$108.3 billionInvestor average loan$716,711FHB average loan$607,624
Source: CBA Half-Year Report (Dec 2025), ABS data cited in article via realestate.com.au
Forward Outlook
While arrears are not rising sharply and most borrowers remain ahead on repayments, regulators have acted to cap high-DTI lending as loan sizes increase. The current data suggests credit risk is contained but under active surveillance — a position likely to persist as lending volumes remain elevated and borrowing levels continue to climb.