AUCKLAND (CU)_Recent reports have shown that the new home lending rules introduced by the government of New Zealand have had unintended consequences. The new regulations were designed to protect vulnerable people from unscrupulous lower-tier lenders, but this has only led to an immediate sharp drop in loan approvals by banks and non-bank lenders. However, ASB chief executive Vittoria Shortt has expressed her confidence that the new rules will be eased so that fewer mortgage applicants will be “knocked out”.
Commerce and Consumer Affairs Minister David Clark recently summoned chief executives of banks for face-to-face meetings, providing them with an opportunity to share their concerns over the new regulations, and Shortt was among these bank bosses who met with the Minister. Following the meeting, the ASB CEO revealed that she had briefed Minister Clark the impact of the new regulations on the bank’s lending. She added that she was optimistic changes will be made in order to ease home loan lending while protecting vulnerable borrowers.
“We are very supportive of the intent of the legislation,” she said. “We are very pleased to see the inquiry has been kicked off so quickly.” “I am pretty confident we can work through and get it to a good place,” Shortt, adding that she is of the view that people aware of the unintended consequences of the new rules and that there would be some changes.
During the meeting the Minister inquired whether banks had become more cautious in lending as a result of rising interest rates, Reserve Bank restrictions on low-deposit bank lending and fears about economic conditions. Shortt noted that ASB’s appetite to lend had not reduced, adding that the firm has been “very comfortable with our settings for some time now”, despite forecasts of an oversupply of housing by 2024 by the bank’s economists.
