Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

New Zealand government to review new banking regulations

banking regulations



The government has asked the Council of Financial Regulators to bring forward an investigation into whether lenders are implementing the new rules as intended, Commerce Minister David Clark said

New Zealand’s government is reviewing new banking regulations after evidence that lenders are applying the rules so rigorously that many people are being shut out of the housing market.

The government has asked the Council of Financial Regulators to bring forward an investigation into whether lenders are implementing the new rules as intended, Commerce Minister David Clark said.

That follows a report from credit bureau Centrix that just 30 per cent of home-loan applications in December resulted in loans, down from 36 per cent before the Credit Contracts and Consumer Finance Act took effect on Dec. 1.

It may be that in the initial weeks of implementing the new CCCFA requirements there has been a decision to unduly err on the side of caution, Clark said in a statement. An investigation by the Council of Financial Regulators will determine the extent to which lender behaviour, in respect of the CCCFA, is a significant factor in changes to banks’ lending practices.

The government introduced the new law to protect vulnerable borrowers following evidence of questionable bank lending practices in Australia, and as soaring New Zealand property prices meant many buyers were taking out ever larger loans. But the suggestion the new law could be stopping many from buying a house will be awkward for Prime Minister Jacinda Ardern, who has frequently said she wants more New Zealanders to be able to own their own home.

Katrina Shanks, chief executive of Financial Advice New Zealand which represents mortgage brokers and other advisers, said the industry supports the protection measures in the new law but there are now clearly unintended consequences.

Some of the stories almost defy logic, like being refused a loan or having the amount cut drastically because you’re spending too much on coffees and takeaways, she said. We believe the intention of this legislation was not to reduce the availability of credit for the average Kiwi who was not vulnerable and could afford a mortgage previously.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.



getting money wise

Welcome! Get your FREE access to EVERYTHING we publish…

Our goal is to show anyone how to make investing profitable. You’ll get our FREE weekly newsletter with latest news and information on investment topics along with special offers. Please take time to read our privacy policy . The information you provide us will be processed in accordance with this.