Commonwealth Bank chief executive Ian Narev confirmed that prior to the bank's decision to raise home loan interest rates it was writing mortgages at a loss.Narev said the bank's move in the past week to increase variable home-loan rates by 10 basis points will only recover part of the cost increase of the past six months.However, he rejected any suggestion that the bank would ration household credit.Narev presented CBA's results for the December half yesterday. Net profit rose 19 per cent, from A$3.05 billion, in the six months to December 2010, to $3.6 billion in the latest half.After adjusting for unrealised hedging gains and some other non-cash items, cash profit for the half was $3.57 billion - up seven per cent on the previous corresponding period.Since June 2007, the bank's cost of wholesale funds has gone up by 45 basis points. The cost of deposits has gone up by 12 basis points over the same period. The bank's chief financial officer, David Craig, said the weighted average cost increase was 25 basis points. "We have passed on 10," he said.Craig said: "Funding costs are going to continue to grow as we replace old funding with new funding at higher margins."Narev said: "In this interest rate environment home loans are not as profitable as they were. But we have an appetite to grow in that market. We are not rationing."Narev also said he thought the process by which home loan interest rates were set had changed. "People should not expect their mortgage rates to go up and down in line with [changes to] the official cash rate," he said.The bank's home loan income fell four per cent year-on-year. Its market share has fallen from 26 to 25.8 per cent over the past year.