Probe into new law sped up

Minister of Commerce and Consumer Affairs David Clark wants a planned investigation into new home loan regulations brought forward amid concerns banks are adopting too hard a line with the guidelines.

The Government brought in a number of changes to the Credit Contracts and Consumer Finance Act late last year, with officials saying the move would mean Kiwis could expect better protection from high-cost loans and unaffordable debt.

But there have been numerous reports of would-be homebuyers having mortgage applications knocked back due to their spending habits — including on takeaways or domestic travel.

Clark last night said he had asked the Council of Financial Regulators — made up of the Reserve Bank, the Treasury, Financial Markets Authority, the Ministry of Business, Innovation and Employment and the Commerce Commission — to speed up the inquiry into whether the act was working as intended.

“Banks appear to be managing their lending more conservatively at present, and this is likely due to global economic conditions,” Clark said, adding that in implementing the law, there may have been “a decision to unduly err on the side of caution”.

He also noted other recent changes affecting buyers including the rising official cash rate, loan-to-value ratio changes and an increase in house prices and local government rates.

Act leader David Seymour welcomed the speedy inquiry.

“Today I heard of someone who missed out on credit for spending too much on their cat, another because their kids shared a room. This madness must be taken seriously by the minister and not kissed off with a weak inquiry.”