"The Government’s new guidance in the Responsible Lending Code and tweaks to the Credit Contracts and Consumer Finance Regulations 2004 are now in force. The latest amendments address some of the issues raised by the changes which came into effect in December 2021, such as excessive inquiries by lenders into potential buyers living expenses. While the changes will be a relief to borrowers and lenders, bringing necessary clarity, they are modest in their scale.
The initial Credit Contract and Consumer Finance Act (CCCFA) amendments announced 1 December 2021 had a significant impact on the property market, and despite being well-intended, required urgent reconsideration.
Across the country, REINZ members reported the reforms’ negative impact on capable borrowers. Members saw a marked decrease in first home buyers and increased caution in the market due to uncertainty around the ability to arrange suitable finance in time to be able to buy — particularly unconditionally.
These changes may encourage prospective buyers to reconsider their opportunities within the market.”
Jen Baird, Chief Executive at REINZ
SOURCE: REINZ.CO.NZ/PRESS
What does this mean?
Nikki Kapadia from Mortgage Express breaks it down for us...
Banks may be slightly relaxed when reviewing clients' expenses and bank statements
They are no longer viewing savings and investments as an expense
They are likely to accept that certain discretionary expenses will be reduced or stopped based on clients’ confirmation
It gives the applicant a better chance of approval