New Lending Laws Changed to Make Lending Easier



Good news for property buyers. Commerce and Consumer Affairs Minister David Clark has announced big changes to the Credit Contracts and Consumer Finance Act reforms.


Originally introduced early December 2021, the reforms tightened lending laws to protect vulnerable buyers and prevent predatory lending. It required lenders to need much more information from borrowers about their financial circumstances before deciding whether to lend to them.


These reforms were recently reviewed, as it had become increasingly clear that the intention of the law was not playing out in reality. Ultimately, the major concern was that buyers who weren't vulnerable were being unnecessarily hindered and turned down for mortgages over their spending habits, even though it would not affect their ability to repay the mortgage.

David Clark has said practical changes have now been made to ensure the intention of the law is the reality.


These changes include:

  • Clarifying that when borrowers provide a detailed breakdown of future living expenses there is no need to inquire into current living expenses from recent bank transactions.

  • Removal of regular "savings" and "investments" as examples of outgoings that lenders need to inquire into.

  • Clarifying that the requirement to obtain information in "sufficient detail" only relates to information provided by borrowers directly rather than relating to information from bank transaction records.

  • Providing alternative guidance and examples for when it is "obvious" that a loan is affordable.


David Clark has said these new reforms are seen to be more in-line with the intention of the original law, and has been what the banks have asked for.


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