House prices are falling, interest rates are probably peaking, the economy is slowing and consumers are nervous. Not so Commonwealth Bank boss Matt Comyn, who says he would advise his own child to be looking to buy their first house soon.

Given Comyn’s children are still teenagers, this was his reply to a theoretical question, but it reflects the top banker’s views on the dynamics of the housing market. To be fair, his precise answer was that he would tell his child to get into the market over the coming 12 months.

The price of housing has already fallen over the past quarter in Sydney and Melbourne, by 4 per cent and 3.4 per cent, respectively, and most experts see this continuing for the remainder of the year and into 2027.

But Comyn, who understands the market and the psychology of borrowers better than most, subscribes to the CBA house view that we have already hit the top of interest rates in this cycle and the next move will be down – albeit not until next year.

Thus, borrowers/first-time buyers are approaching a sweet spot, where prices are falling, rates are no longer rising, and a new batch of spring real estate listings is about to hit the market.

And if CBA’s 15 per cent fall in home-loan applications (and 28 per cent fall in investor home-loan applications) since May is any guide, buyers looking to bid won’t be elbowed out by competition crowding the front lawns on auction day.

That certainly represents the glass half-full view.

And if CBA’s fall in home-loan applications is any guide, buyers looking to bid won’t be elbowed out by competition crowding the front lawns on auction day.

But what advice would Comyn give to CBA’s 800,000 shareholders, given the bank’s bread-and-butter home-lending business has developed a fissure created by higher rates and exacerbated by the government’s new tax policy on capital gains and negative gearing?

Jarden analyst Matthew Wilson threw diplomacy to the wind when he laid out his thoughts to investors: “Home-loan application trends are clearly persistently negative. Loans create deposits. This scenario has materially negative consequences for bank revenue growth.

“Less loans, less deposits and more competition doesn’t bode well for [the bank’s] net interest margins ... shift happens,” he warned.

Comyn concedes that additional competition for home loans is becoming evident with the emergence of some improved “deals” on interest rates – which is great for borrowers, but not for the bank’s profit margins.

While Comyn can’t argue with the numbers that suggest home-loan applications have hit an air pocket, he says demand began to stabilise this month.

Given loan applications only hit the slide in May, the full-year result that CBA reported on Wednesday mostly covered a period (from July last year to the end of June this year) when credit growth for homes was booming. And while the bank is heavily skewed towards retail banking, it hasn’t felt the challenges in its business banking arm, which is still humming along nicely.

Thus, the result reflected 12 months of strong performances from most of its divisions and 10 months from retail lending, leading to a cash earnings improvement of an impressive 7 per cent and a larger than expected dividend.

It was another example of the well-pitched results we have come to expect from CBA.

But the spectre of the rocky road ahead in mortgage growth will reignite the debate about the bank’s premium share price.

Jarden, for example, has a 12-month share price target of $90 for CBA – a long way short of the stock’s current trading price of about $172. Citi’s target price is a relatively generous $135, in line with UBS, while Barrenjoey sits in the middle of the pack with a price target of $120, but below Goldman Sachs, which has set a 12-month expectation of $129.

For years, shareholders – dominated by mum and dad investors – have been ignoring the brokers’ analysis and sell recommendations.

As CBA’s stock bounced between gains and losses on Wednesday, there was no evidence that shareholders were particularly spooked. Alert, maybe, but not alarmed.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.