Future homeowners are shut out of the property market by new lending restrictions

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She said a survey of mortgage advisers identified a significant reduction in non-renewal pre-approvals and reductions in loan levels due to new requirements in the Credit Agreement and Consumer Credit Act. (CCFAC).

“In two days, we had 300 stories of clients who hadn’t been able to get a mortgage, or had been more difficult, or had been reduced, or turned down outright,” she said.

“The problem with the CCCFA is that it is a very wide net which has captured all New Zealanders, not just those who are vulnerable. This has made the accessibility test so difficult now that the New Zealander Average Zealander who was not vulnerable cannot get the credit he could before.”

In some cases, Shanks said banks were refusing loan applications or drastically reducing the amount they loaned because people were spending too much on takeaways and cafes.

Centrix chief executive Keith McLaughlin said there had been a dramatic drop in the number of loans since the CCCFA came into force on December 1.

“Early signs are that the market is struggling to deal with the new CCCFA legislation,” he said.

“It causes a delay in the processing of applications, it increases costs, it increases the disclosure required by the borrower, and ultimately those costs will be passed on to the borrower.”

Shanks has written to Trade and Consumer Affairs Minister David Clark asking for a review of the legislative changes.

Chief Law Officer David Seymour has called for an investigation, while Managing Director of Squirrel Mortgage Brokers John Bolton has launched a petition to Parliament as he believes the legislation could drive many borrowers to lenders of late. appeal.

Credit reporting firm Equifax separately found that demand for consumer credit fell more than 30% in the three months to December, while demand for home loans fell 35% from the same quarter in 2020.

Equifax New Zealand chief executive Angus Luffman said the fall was mainly caused by the closures.

“The extended shutdowns in Auckland have impacted demand, leading to sharp declines in all major retail credit products,” he said.

“The percentage declines are exacerbated by the huge volume of home loan applications recorded during the December 2020 quarter. Demand peaked during this period, so it is important to consider the equation. “

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