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Mortgages

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CCCFA an opportunity for advisers

Mortgage advisers will benefit from CCCFA lending changes as borrowers seek help with complex home loan applications, according to Squirrel's John Bolton.

Tuesday, September 21st 2021, 7:44AM 1 Comment

The Squirrel founder believes the forthcoming Credit Contracts and Consumer Finance Act changes, which put additional emphasis on lenders to review customer affordability, will "slow things down" in the application process.

While loan applications will become more "painful", Bolton says, the complexities should play into the hands of brokers.

Bolton believes more home loan clients will seek specialist help after being turned down by their bank.

"Suddenly it's gonna feel very difficult for customers dealing with their own bank. But brokers should be having a party on this, because suddenly they will have a lot of customers."

He also believes advisers will increase their market share as borrowers seek help.  

"It's going to make it harder for consumers to borrow money," Bolton said. "But it'll be great for the broker industry. You're gonna see a lot more borrowers using brokers. Brokers will end up probably in excess of 60% of the market within a reasonably short period of time."

He called on the industry to prepare for a greater amount of paperwork and more clients coming through the door.

"I guess the only problem that we've got to deal with is the fact that there's gonna be a lot of paperwork and it's gonna be a painful process. Brokers may be moaning, but they should actually be having a plan," he added. 

Changes to the CCCFA have been designed to protect vulnerable borrowers, yet the law is broad in scope and will capture the biggest banks and mortgage lenders. 

Advisers report that banks have begun to place a more granular emphasis on affordability, reviewing subscriptions, buy-now-pay-later services, and other small outgoings. 

Banks are expected to collect more evidence of customer affordability under the changes, which come into effect on December 1. 

Bolton said the loan application process had already become more difficult for borrowers – even wealthy clients.

He said bank customers in a strong financial position were being made to evidence their income in minute detail under the new rules.

"For one client, a chairman of a large company, I had to go to the CFO and get a letter confirming his income, even though he owns half of the bloody company ... It's just stupid, right? It's a real regulatory overstretch."

Tags: banks CCCFA home loans legislation Lending regulation Squirrel

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Comments from our readers

On 21 September 2021 at 12:20 pm Andy the adviser said:
I admire your enthusiasm John, really. But banks perspectives are often far different from reality.

Already brokers are being impacted, with the banks now asking for information that many of us have already been providing in the past. But this was not in a format that the banks wanted (possibly to hide their own shortcomings) or understood. Instead we had to rearrange the figures to fit their ridiculous debt servicing guestimators, thus omitting the extensive and valuable information that we had gleaned during client interviews.

Now every bank has their own series of questions, forms and criteria for us to complete. This makes it important to decide on a suitable provider (bank) at the earliest opportunity to avoid having to fill in too many surplus forms and waste valuable client time.

This goes against the intentions of the Code.

Sorry John - the CCCFA has missed its mark. The REAL problem in the industry, the elephant in the china store is the proliferation of after-pay and finance companies who are force-feeding consumers with very little consequence.

As mortgage advisers, we can do everything perfectly, meet all criteria, and set out a great future for our clients, only for it all to dissolve in a puff of afterpay.

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▲2.99 ▲3.45 ▲3.69
ANZ 4.59 3.39 3.85 4.09
ANZ Blueprint to Build 1.68 - - -
ANZ Special - 2.79 3.25 3.49
ASB Back My Build 2.04 - - -
ASB Bank 4.45 ▲2.99 ▲3.45 ▲3.69
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - ▲2.99 ▲3.45 ▲3.69
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 4.70 ▲3.59 ▲4.05 ▲4.29
BNZ - TotalMoney 4.70 - - -
CFML Loans 5.15 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.25 1.85 2.35 2.65
Heretaunga Building Society 4.99 3.80 3.90 -
Lender Flt 1yr 2yr 3yr
HSBC Premier 4.49 2.19 2.45 2.69
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.45 2.85 3.15
Kainga Ora 4.43 2.88 3.28 3.59
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank ▲4.00 3.80 ▲4.15 ▲4.50
Kiwibank - Offset ▲4.00 - - -
Kiwibank Special 3.75 2.95 ▲3.30 ▲3.65
Liberty 5.69 - - -
Nelson Building Society 4.95 2.99 3.24 -
Lender Flt 1yr 2yr 3yr
Pepper Essential 4.79 - - -
Resimac 3.39 2.98 2.79 3.29
SBS Bank 4.54 3.05 3.45 3.75
SBS Bank Special - 2.55 2.95 3.25
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.65 - -
The Co-operative Bank - Owner Occ ▲4.55 2.79 3.25 3.49
The Co-operative Bank - Standard ▲4.55 3.59 4.05 4.29
TSB Bank 5.34 ▲3.54 ▲4.00 ▲4.24
TSB Special 4.54 ▲2.74 ▲3.20 ▲3.44
Wairarapa Building Society 4.99 3.55 3.49 -
Lender Flt 1yr 2yr 3yr
Westpac 4.84 ▲3.59 ▲4.05 ▲4.29
Westpac - Offset 4.84 - - -
Westpac Special - ▲2.99 ▲3.45 ▲3.69
Median 4.57 2.99 3.45 3.65

Last updated: 18 October 2021 9:15am

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