National’s plan to solve the home loan crisis caused by new responsible lending rules
Kevin Stent / Stuff
Nicola Willis is calling on the government to pass legislation to quickly address the unintended consequences of new responsible lending regulations.
National has drafted legislation it says could undo the damage new responsible lending regulations have done to borrowers’ chances of getting a home loan.
National Housing spokeswoman Nicola Willis said she had written to Trade and Consumer Affairs Minister David Clark asking him to pass Andrew’s private member’s bill as a matter of urgency. Bayly.
Critics of the new regulations, which came into force on December 1, say they are too prescriptive and mean that some people are no longer eligible for bank mortgages that would have been given to them previously.
Willis said: “Regulations have led banks to intrusively audit the spending histories of potential borrowers and Kiwis have had their loan applications rejected for absurd reasons like buying takeout too often, subscribing to Netflix or go to therapy.”
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She said the regulations were meant to target predatory and high-risk lenders, not force heavily regulated banks to cut their mortgages.
Bayly’s bill would change the regulatory powers of the Credit Agreement and Consumer Finance Act to allow for different regulations for different types of lenders.
This would allow for stricter and more prescriptive responsible lending rules for lower-tier lenders like payday lenders, while leaving banks less regulated.
Independent economist Tony Alexander says mortgage lenders’ willingness to lend has declined.
“The government has taken a comprehensive approach that subjects banks to the same set of highly prescriptive and draconian regulations as high-risk payday lenders, although banks are already subject to a comprehensive set of mortgage standards enforced by the Bank. spare,” Willis said.
“There is a categorical difference between regulated financial institutions that issue long-term mortgages at low interest rates and other types of higher-risk, shorter-term loans issued by other lenders at different purposes,” Willis said.
The bill would require the minister to consider their different scale and risk profiles when setting regulations for their lending business.
“We want to work with the government to pass this law. This is an immediate problem with the hopes and financial futures of thousands of Kiwis at stake. We urge the government to give our proposal proper consideration,” she said.
Bayly’s bill is called the Consumer Credit Agreement and Financing Amendment Bill (Reasonable Investigations by Regulated Financial Institutions).
Following face-to-face meetings with Clark last week, the chief executives of ANZ and ASB made public statements about the proportion of home loan applications their banks have had to turn down since December 1, which that they would have previously approved.
ANZ’s Antonia Watson said it was six out of 100 loans, while ASB’s Vittoria Shortt said it was seven out of 100.