Although interest rates are likely at their highest, mortgage holders face difficult financial decisions, bank executives say.

Appearing at a parliamentary review of the big four banks, the bosses of Westpac and Commonwealth Bank said cost-of-living concerns were still weighing on their customers’ budgets.

Westpac chief executive Peter King said that while interest rates were expected to start falling from February, people would continue to face financial pressure.

“We recognise that many Australian households are making difficult spending decisions to balance their budgets,” he told the committee on Thursday.

“It’s a two-speed customer base… Those who have savings benefit from higher interest rates.”

“Borrowers, especially those who have taken out new mortgage loans, are feeling the brunt of higher interest rates.”

The Reserve Bank has kept the official interest rate at 4.35 percent since November.

According to King, interest rates would likely settle “in the low three percent range.”

“The resilience of the economy is reflected in our customer base,” he said.

“For example, the overall credit burden has increased to 1.4 percent, but is below expectations.”

Younger people are the ones most affected by higher interest rates and persistent inflation, Matt Comyn, CEO of the Commonwealth Bank, had previously explained at the hearing.

“Savings are running out, particularly among working families. Younger Australians, who tend to have lower incomes and lower savings, are most sensitive to these price changes,” he said.

Mr Comyn said that while the overall economy was “fundamentally healthy”, the cost of living was putting pressure on the bank’s customers.

“The impact of monetary policy is being felt unevenly across the country, with borrowers and savers experiencing different experiences. … Households are spending more on essentials and cutting back on non-essentials,” he said in the study.

The story continues

“Many of our customers are struggling to cope with the higher cost of living.”

The manager criticised the claim that Commonwealth Bank made its $9.8 billion profit at the expense of inflated customer prices, calling it “fact-free rhetoric”.

“The Australian economy is portrayed in this false dichotomy: if a business generates any income or profit at all, it is often assumed or directly expected that it is unfairly extracting money from consumers,” he told the committee.

“It really undermines trust in our institutions, in all of our institutions. I think that’s a real cause for concern.”

The Greens called for a 40 percent tax on companies with high profits, but Comyn described the move as “insidious populism.”

Mr Comyn was asked why customers often have to pay a surcharge when making card purchases, but said this was not a direct comparison with cash.

“The cost of accepting electronic payments has fallen by more than 30 percent,” he said.

“We are one of the markets with the lowest acceptance costs in the world, if not the only one.”

The executives’ appearance was the first of two days of hearings on the four major banks, which account for 80 percent of the market.

NAB chief executive Andrew Irvine and ANZ boss Shayne Elliott will appear before the committee on Friday.