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Squirrel chief executive John Bolton believes the new lending laws have ushered in ultra-conservative lending policies on the part of banks.
Mortgage broker John Bolton will lead his campaign to have home loans excluded from changes to the Loans Act in Parliament.
Bolton has become the focal point of protests by mortgage brokers against new responsible lending laws introduced on December 1, which they say are preventing young buyers from climbing the real estate ladder and reducing their business’ profitability.
The rules require banks to take a closer look at whether borrowers can afford the loans they seek – the result has been described as a “credit crunch” and 93% of brokers say it is growing. more difficult to obtain financing.
Bolton collected the signatures of just under 7,000 supporters via a petition on Change.org.nz accusing the government of incompetence in creating laws that were only meant to protect vulnerable borrowers from loan sharks, but instead had disrupted mortgage lending.
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“We’re going to do an appropriate parliamentary petition in the New Year, and we’re going to say, ‘Thank you all for signing the petition,’ and ask them to sign the parliamentary petition,” said Bolton, chief brokerage officer. mortgage. Squirrel company.
Once presented to Parliament, a petition goes through a formal process and must be assessed and reported by Members of Parliament.
Bolton said the rules have ushered in a climate of ultra-conservatism in banks’ mortgage lending operations, despite the very low mortgage default rates.
“With regard to home loans, there was no problem to fix. ANZ, which has 30 percent of the market, reports a mortgage arrears rate of 0.50 percent. This means that in a pretty tough year, only one in 200 homeowners missed a mortgage payment, ”Bolton said.
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Reserve Bank Governor Adrian Orr expressed concern in August about the situation recent homebuyers might find themselves in, and since then prices have risen rather than fallen.
“The law change was designed to protect vulnerable borrowers from shopping trucks and predatory lenders, but no one in government has thought of the wider impact on ordinary Kiwis trying to go about their business,” he said. he declared.
These impacts included the ability for people to borrow less, and some people, who would have been eligible for home loans a month ago, were now turned down.
Bolton’s petition wasn’t just signed by mortgage brokers, angry at having to do more work to prepare each loan application to go to the banks, without getting paid more to do it.
It was also signed by people wishing to buy houses, including some who were refused loans.
Darren Ludlam from Christchurch signed and said: “Just as we saved enough money for a good deposit on our first home with our two year old, the doors were slammed on us! We can now safely repay a 15 year loan and our pre-approval has not been renewed.
“The new laws are a knee-jerk reaction that are poorly thought out and poorly constructed. They only act to stop, frustrate and further demoralize first-time homebuyers while making things better for mega-homeowners. They are counterproductive and now make home ownership almost impossible for those with a proven, stable and strong financial history.
First-time homebuyer Chris Bennet said, “We just had our mortgage turned down because of these new rules – a mortgage that would have been approved on November 30. The bank confirmed it. We are not a vulnerable borrower, but the rules are now such that the person lending us the deposit must also be able to repay the entire loan in the event of default. “
Peter Meecham / Stuff
Credit reporting agency Centrix says loan applications haven’t slowed down, but it won’t be until early January that numbers will show if fewer loans are approved by banks and other lenders .
“Our parents were happy to allow the use of their freehold property, but because they are retired they do not have enough income. Now that means my wife and I are now out of the market for at least five years until we can get a 10 percent down payment together, ”he said.
“If there is no change, we may have to look abroad for a living. This government was supposed to make it easier for us as first-time buyers, but all we see are new, higher hurdles to overcome. “
Other petitioners have explained how much more difficult and time-consuming mortgage applications have become.
Janet McEwen said: “Last year the bank was happy to lend me money, but I wasn’t ready to buy. This year when I looked to get pre-approved the hoops were horrible. “