Shanks says she wrote to Trade Minister David Clark on December 16 to raise the issues and request a meeting, but is still awaiting a response. She wrote that the industry supported measures to protect consumers and understood that the changes were intended to do so.
However, she said implementing the changes has led to some being “significantly disadvantaged and excluded from funding options”.
“At the end of last year, we surveyed our mortgage advisers and in two days we had 300 examples of loans reduced due to changes in the CCCFA, change in loan-to-value ratios, increased interest rates and debt-income ratios which may be applied by some lenders.”
Changes were made to LVRs by the Reserve Bank last year as house prices soared. The central bank also raised the official exchange rate as inflation rose, causing interest rates to rise.
Shanks describes it as “a perfect storm for housing seekers’ ability to get credit.”
“Lenders now have additional obligations when determining the affordability and suitability of a loan. as discretionary as non-discretionary in order to meet the new requirements of the CCCFA.
“Some stories almost defy logic, like being denied a loan or seeing the amount drastically reduced because you spend too much on coffees and takeaways.”
the Otago daily timetables reports on Friday that Dunedin wife Kim Anderson-Robb had her loan application turned down by her bank because of a $187 Christmas shopping trip to Kmart in Invercargill, $100 spent at the warehouse and a credit card she hasn’t used for over a year. Her husband’s daily trip to the dairy for a drink at work was also mentioned.
The couple have had a mortgage for 17 years and have never missed a payment or asked for a vacation, she said. Their mortgage is $63,000 and wanted it increased to $80,000 to help with urgent home repairs.
“We get paid well but they turned us down because of a one-off trip to buy Christmas presents and a bloody drink. That’s stupid,” she told the ODT.
Ahead of the changes taking effect, ANZ warned that the rules around affordability checks “are very strict” and that customers “may find it harder to get credit than they did in the past”.
In a Dec. 1 press release, Clark said it was “extremely important” to prevent people from “falling into the trap of taking on unaffordable debt.”
“We have ensured that the rules are clear for lenders and applied consistently at all levels. The detailed requirements are complemented by the Responsible Lending Code, which provides guidance on their obligations.
“The industry has worked hard to implement these changes over the past year and I’m delighted to see this drive to improve consumer outcomes.”
