Reserve keeps demons at bay for CBA chief

Commonwealth Bank chief executive Ian Narev does not lie awake at night worrying about how the property market might respond to record-low interest rates, despite persistent questions about house prices from foreign investors.

The chief of the country's biggest bank said on Monday he thought the economy was suffering from low confidence, and it was important that the election produced a clear winner.

He also said he thought there would probably be one more 0.25 percentage point cut in the cash rate, after the Reserve last week cut the benchmark rate to a 53-year low of 2.5 per cent.

While some experts are debating the potential for cheap debt to sow the seeds of a housing bubble, Mr Narev said he had confidence in the judgment of Reserve governor Glenn Stevens and the board.

"I am absolutely confident that all direct and indirect consequences for the property market that may flow from a change in interest rates are absolutely thought through by the governor and his board," he said at a conference in Sydney.

"I do not lose a moment's sleep thinking about that. They think very carefully about a range of issues, they are absolutely aware of what effects different interest rate settings might have on the economy and I've got a lot of confidence that they ... have a good perspective about that."

Mr Narev said foreign investors "always" wanted to talk about Australian house prices, but "stress tests" had found the bank would survive a severe housing downturn with price falls of up to 40 per cent.

The comments came amid fresh signs of banks competing to sell home loans, with NAB offering $1000 cash payments to customers who refinanced with the lender.

Aussie Home Loans also slashed rates on two-year fixed mortgages to 4.64 per cent, a move it said was facilitated by funding from CBA, which owns 80 per cent of the mortgage business.

After the sharp falls in interest rates, some analysts and industry insiders say there is a debate to be had on risks of a housing bubble.

Real estate agent John McGrath, speaking on the same panel, said the recent pace of price growth in some areas was fast and probably not sustainable over the long term.

Money markets have priced in one more rate cut of 0.25 percentage points, and Mr Narev said he thought this was about right. He also said the economy was affected by low confidence, and it was important that whoever won the election had a clear majority.

"We love the fact that we're so dependent on Australia as an economy ... but in the short term there are some confidence challenges, and we've all got to be aware of those," he said.