Govt Must Review CCCFA Impact On Home Buyers

“Too many loan applications continue to be declined since lending restrictions took effect last December. It’s encouraging that the Government is prepared to make tweaks, but the hurdles remain too high for many Kiwis seeking a mortgage,” says Tim Kearins, Owner of Century 21 New Zealand.

His comments follow Commerce and Consumer Affairs Minister David Clark announcing further changes to loosen the Credit Contracts and Consumer Finance Act (CCCFA) regulations.

This marks the second tranche of tweaks since the new regulations and a Responsible Lending Code took effect on 1 December 2021. Loud and wide criticism then followed that the requirements were overly prescriptive and too heavy handed.

“We all agree with moves to hit loan sharks who target vulnerable borrowers. However, increasing numbers of financial experts, banks, brokers, and home buyers continue to get hit by a very broad brush the Government is applying to all loan applications.

“It’s a shame because many very backable young Kiwis, with solid incomes, are missing out on property purchases just when a softening market is creating great opportunities for them,” he says.

The Century 21 leader is now calling on the Government to review the regulations’ impact on mortgage applications and make further changes if required.

“Banks have consistently advised that 10 percent of all loans they would’ve once been approved are now getting declined. That number needs to fall, and if it doesn’t more clarification and changes must be made by the Government. The last thing the country needs is a near impossible lending environment.”

He says since December, the credit crunch has exacerbated the softening property market. If first-home and next-home buyers continue to struggle to access finance, the regulations will continue to add considerable drag.

“The Government has widened access to its deposit schemes, rents remain sky-high, and entry-level house prices are looking more attractive. Too many young Kiwis, however, continue to fall short at a time when we as a country should be throwing everything at homeownership.

“Borrowing money is hard enough and getting more expensive. The Government now needs make sure it’s still actually possible for most. If unworkable lending regulations continue, they will put a huge cost on New Zealand in the short and long term,” says Tim Kearins.

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