First homebuyers

PHOTO: First homebuyers. FILE

The Government has changed the law so banks stop looking into customers’ daily spending habits when assessing them for loans.

First-home buyer

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One couple, Brie and her partner Devlin are proud first-home owners still in their twenties.

It’s an exciting time for them, mucking in yesterday with a fresh paint job for their new home.

But getting finance to purchase the 450-thousand dollar Lower Hutt property came with challenges.

“There were quite a few loopholes with the loan, which made it quite hard,” First-Home Owner Brie Anglesey told Newshub.

In late 2021, the Government tightened lending rules under a law known as the Triple-C-F-A,  to prevent irresponsible lending.



But soon enough came complaints from bank customers about declining loans based on daily purchases, like buying a coffee – what’s known as ‘discretionary spending’.

We were really warned that we needed to watch what we were spending, I moved to tea instead of coffee to help with that,” Anglesey said.

The law change led to a decline in accessing finance, the graph compared total lending across three consecutive months of February.

So, the Government changed the law again, “explicitly excluding discretionary expenses from affordability testing” from the 4th of May.


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“Brunch and movies, if you haven’t got money to pay back your loan, you don’t do them anyway, so we could cut those out,” Commerce and Consumer Affairs Minister Duncan Webb said.

Tough lending rules, combined with rising interest rates, have led to a decline in house prices.

This Central Auckland unit sold last week for around $790 thousand dollars but a unit next door which is identical, sold in late 2021 for around $920 thousand.

The Minister hopes the law change will help more potential buyers get into the housing market…

“We do want to make it less difficult for people to borrow money, whether it be for mortgages, cars or other things.”

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There are fears though, it could open the door to risky lending…

“I have concern that the lending can be based on whatever future cost the borrower says they’ve got, which is just opening up the door to made-up budgets, really,” Financial Coach Shula Newland told Newshub.

But for hopeful home buyers struggling to get finance, this could be the stroke of good fortune… they’ve been waiting for.