The earning season for the Commonwealth Bank and Macquarie is more evidence that commercial bank profiteering is worsening housing affordability.
The return on equity of 13 percent and Commbank’s cash profit of $5.4 billion are the trophies of a money siphon that extracts wealth from renters and mortgage payers to asset owners and the billionaire “Epstein Class”.
Every earnings season is a celebration by the billionaire and banking elite of the extreme concentration and power of financial capital. These bank profits are driven by a “relentless growth in home loan” market share — which simply means they profit from making housing unaffordable.
Relentless flood of new debt
To achieve these returns, banks must constantly issue new debt. CBA explicitly stated it managed to increase mortgages “above the rate of growth of the banking system” which directly contributes to making housing more expensive through creating credit for the sole purpose of bidding up the price of existing homes rather than productive investment.
The major commercial banks extract surplus value from the working class and petit bourgeoisie through debt. The so-called “great Australian household recovery” from the AFR article is a euphemism that hides massive household and mortgage debt.
CBA also utilises a “flywheel” strategy. This is where Commbank’s massive scale leads to higher margins and profits, which are reinvested into technology to capture even more customers.
This predatory, monopoly-enabled flywheel is celebrated in the financial media, but creates a self-perpetuating cycle where the banking system becomes increasingly efficient at pumping mortgage credit into the economy, keeping housing prices high and unaffordable relative to incomes.
Give the wealthy the capital
Meanwhile, Macquarie is focusing on using their government provided “para-economic privilege” to create money out of thin air to to “go after the best and most profitable customers in the market”.
By targeting low-risk, wealthy borrowers (the “haves”), banks facilitate the accumulation of property assets by those who are already wealthy.
If you have an average income, you are bidding against Macquarie-funded property speculators. Macquarie’s business model specialises in aggressive lending to the ultra-wealthy.
This further financialises housing as an asset class for the ultra-rich rather than a utility for the population.
Banks need ever increasing house prices
The commercial banking sector’s profitability is utterly tied to the value of the underlying assets, the homes that are the collateral for the debts.
As a consequence, banks will not finance the building of new homes that will actually cause housing prices to fall.
Banks reduce lending in areas where prices are declining because they do not want to hold “bad mortgages”. This creates a market trap: the financing required to build new homes, which could lower prices through increased supply, will never be funded by banks if housing prices actually start to fall.
Funding existing housing, not new wealth creation
Banks do not fund factories. They do not fund useful industry, businesses, or innovative start-ups. Banks prefer dead assets like existing houses over “live” ones. Houses don’t go on strike or fail to invent a new product. They just sit there extracting wealth.
The banking system is incentivised by lending laws (that they, in large part, wrote to increase their own profits) to give loans for mortgage lending over productive investment. This diverts capital away from actual economic development.
The massive profits reported by CBA and Macquarie reinforce this behaviour; as long as mortgages remain the most profitable asset on a bank’s balance sheet, capital will continue to flow into real estate speculation rather than other sectors of the economy.
It creates an economy reliant on asset inflation and rent extraction by the ultra-rich from everyday people.
Large, predatory monopolistic banks
The intense competition between giants like CBA and Macquarie is forcing smaller regional banks to struggle, creating a “two-tier bank system”.
Australia already has one of the most concentrated banking sectors with barely any genuine competition — Commbank and Westpac between them control nearly half of all mortgage lending.
If smaller banks are unable to match the deposit rates or technology of the majors, they will get lower returns and are forced to compete aggressively on lending standards (more predatory lending to people who can’t afford it) or exit the market (reducing competition and consolidating the market around the Big Four Banks). In either scenario, the big banks and ultra-rich profit most from the status quo of high asset prices.
This practice increases demand without adding supply. It pushes prices higher. Simultaneously, it raises massive financial risk in the system. When the bubble bursts, the public bails out the banks, and the Big Banks eat up the smaller banks.
The explosion of mortgage debt since the 1980s
Since commercial bank deregulation in the 1980s, mortgage debt exploded in Australia. Between 1987 and 2015, the growth in mortgage debt outstripped both house price and income growth.
In this period, mortgage debt increased by 600 per cent (from $27,000 to over $185,000). House prices tripled. Income growth only doubled.
Our tax system has been working to reduce housing affordability since 1999, when John Howard and Peter Costello changed capital gains tax so that it combined with negative gearing to incentivise investment. Greg Jericho, The Guardian 2025
For people who rely on wages as their primary source of income and wealth, it is structurally, mathematically impossible to ever catch up.
The vicious cycle of supply and high prices
Banks force a cycle where new housing supply is contingent on high prices. Developers will not build unless they secure massive profit margins. The banks will not fund construction otherwise.
This mechanism effectively prevents the market from correcting itself. Prices must remain high to justify any new development projects.
Where banks do finance new developments, commercial bank “finance fees” are a major cost on the construction of approved dwellings. Banks demand high returns for big developments. Their extraction of debt repayments makes building impossible for many projects and privileges “luxury” developments that have the best returns, rather than affordable housing. This maintains asset scarcity and keeps prices elevated.
Banks purposely make housing unaffordable
The banking profits that are gleefully reported on each earnings season in the AFR are the result of a financialised feedback loop that vastly pushes up the cost of housing and enriches the small group of ultra-rich property speculators.
Banks compete to issue as much debt as possible to “profitable” customers, which drives up housing prices, which in turn requires larger loans, generating even higher profits for the banks while locking ordinary citizens out of homeownership.
Since the 1980s, the commercial banks in Australia and globally have supercharged the socially destructive system to financialise housing, extract massive interest payments from workers and siphon wealth to the ultra-rich.