Why the CBA (ASX:CBA) share price is down 4% today

The CBA share price abruptly plunges 4%. Here’s why.
The post Why the CBA (ASX:CBA) share price is down 4% today appeared first on The Motley Fool Australia. –

The Commonwealth Bank of Australia (ASX: CBA) share price is down on Friday as the S&P/ASX 200 Index (ASX: XJO) was quick to reverse yesterday’s gains.

At the time of writing, the CBA share price is down 4.33% to $99.75, bringing its returns for the past month to -1.21%.

Today’s losses greatly overshoot the broader ASX 200, which is currently down 2.08% to a 4-month low of 7,182.

What’s driving the CBA share price lower?

The Australian Bureau of Statistics (ABS) released fresh data this morning about new borrower-accepted finance commitments for housing, personal and business loans for August.

The report flagged that new loan commitments, from a month-on-month perspective:

Fell 4.3% for housing
Fell 2.5% for personal fixed term loans
Plunged 26.4% for business construction

Breaking down housing finance, the report flagged that owner-occupier housing fell 6.6%, the largest decline since May 2020. While investor housing itched 1.5% higher.

Overall, total housing fell 4.3%, which again, is the largest fall since the pandemic outbreak.

Total housing finance has boomed off the back of solid economic recovery and a red hot housing market. To add some perspective, new loan commitments for housing, seasonally adjusted, doubled from May 2020 lows of $16.66 billion to a peak of $32.56 billion by May 2021.

During this time, the CBA share price rallied more than 50% from pandemic lows of $60 to well over $100 by mid-June this year.

But it looks like the CBA share price has hit a wall amid a slowdown in demand for loans.

The Reserve Bank of Australia noted similar trends in its September monetary policy meeting with members flagging that the “current lockdowns were likely to affect demand for new loans in the coming months.”

Members also added that “given the environment of rising housing prices and low interest rates, members continued to emphasise the importance of maintaining lending standards and carefully monitoring trends in borrowing.”

The post Why the CBA (ASX:CBA) share price is down 4% today appeared first on The Motley Fool Australia.

Should you invest $1,000 in Commonwealth Bank right now?

Before you consider Commonwealth Bank, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Commonwealth Bank wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

The CBA (ASX:CBA) share price is underperforming against the big four banks today
ASX 200 (ASX:XJO) midday update: Zip shares rise on Microsoft deal, big four banks rebound

The ASX 200 banks may be in danger as half of mortgage-stressed households have “borrowed to the hilt”

ASX 200 (ASX:XJO) midday update: Big four banks fall, Afterpay tumbles

Confirmed: APRA is planning action on home loans, ASX 200 banks drop

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!