SYDNEY, July 13 (Reuters) - The head of Commonwealth Bank of...

SYDNEY, July 13 (Reuters) - The head of Commonwealth Bank of Australia (CBA) (CBA) , the nation's biggest bank, said he was surprised by the labour market's resilience after a year of interest rate rises, but warned the economy would soften more due to higher living costs.

Australia's central bank has raised rates 400 basis points in 14 months, the fastest tightening in a generation, to slow inflation, prompting economists to forecast a surge in unemployment and late mortgage repayments.

But unemployment remains near the lowest on record, a data point that banks say has kept levels of late repayments below historic levels even as borrowers cut back on discretionary spending.

"The resilience has probably surprised us," Commonwealth Bank CEO Matt Comyn told a parliamentary hearing on Thursday, referring to the labour market.

The bank, which has a quarter of Australia's A$2 trillion ($1.4 trillion) mortgage market, had predicted unemployment above 4% by the end of 2023, from 3.5% currently, but "that may end up being too pessimistic", Comyn added.

Comyn said that households would come under more financial pressure amid persistently high grocery, fuel and power costs, as well as higher mortgage repayments. Thousands of home owners were still to have their fixed-rate loans expire, and roll into a higher variable loan, he said.

"You will continue to see more pressure on households over the next six months ... just as customers are coming off fixed rates (and) rents are continuing to increase," he said.

The heads of Australia's four major banks are required to testify periodically in a House of Representatives economics committee.

CEOs of National Australia Bank (NAB) and ANZ Group (ANZ) , the country's No.3 and No.4 lenders, testified on Wednesday and the head of No.2 bank Westpac (WBC) will speak later on Thursday. ($1 = 1.4725 Australian dollars)