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Tweaking CCCFA changes won’t rescue housing market from price falls

There are bigger forces at play than just the Credit Contracts and Consumer Finance Act (CCCFA), such as rapidly rising inflation here and abroad when it comes to the housing market, says Jeremy Couchman,  Kiwibank’s senior economist.

Friday, March 18th 2022, 9:45AM

“Omicron is pushing up domestic generated inflation in an already capacity constrained economy. Meanwhile the war in Ukraine has seen commodity prices, such as oil, surge.

“The RBNZ’s fight to rein in inflation is likely to see mortgage rates rise further and they are already being adjusted upwards to this new reality,” says Couchman.

The CCCFA’s proposed changes include removing regular 'savings' and 'investments' from would-be borrowers' expenses that were measured against their intended loan.

They also reduce the need for lenders to comb through bank statements of all borrowers – an apparent reference to the notorious cups of latte and Christmas shopping that were added to a borrower's outgoings.

The changes come part way through a review of the CCCFA by MBIE officials on behalf of Financial Regulators Council and there is suspicion Commerce and Consumers Affairs Minister David Clark announced some of the changes early because there is an election next year.

Mortgage broking company AdviceHQ managing director David Green agrees with Kiwibank that there is more than just the CCCFA at play for borrowers.

“A lot of changes were made from the middle to the end of last year - LVRs, tax, and banks using DTIs although they have not been officially introduced by the Reserve Bank - that have had far reaching effects on the housing market and are big impediments for most borrowers.

He says these changes are helping to upend up the housing market and are not being unwound. “Interest rates and inflation are also in play making it even tougher.”

While the proposed CCCFA changes are a step in the right direction and hopefully lead to more common sense lending for mortgages, Green has seen little detail about them and whether the onerous liabilities on bank and other lenders’ directors and managers will change. “All I have seen is a couple of bullet points and not much else.”

He says the concern is about the detail -  banks’ approach to the changes and timing of them. “If the Minister doesn’t change the liability for directors and senior managers to put in place methods for identifying any deficiencies in the effectiveness of CCCFA compliance procedures or face fines of up to $200,000, the changes might not work.”

He says the timing of Clark’s announcement on the changes came quicker than expected. It is a red flag. There is an election coming up next year.”

He says while the CCCFA is causing more difficulty for banks he hopes the proposed changes will avoid a credit crunch.

Property Investors Federation chief executive Sharon Cullwick says the CCCFA changes will be a good for investors and all borrowers. “The devil is in the detail and that hasn’t been revealed.”

She says the CCCFA, coming on top of changes to the tax property investors were able to claim on mortgage interest to offset it against rental income, interest rate rises and LVR stopped the Hawkes Bay Property Association’s 300 members in their tracks, for example. “I don’t know of one investor buying at the moment.”

Cullwick says investors are waiting until the market turns and the CCCFA rules are loosened as there is not much is the way of yields being achieved and cost are increasing rapidly.

Westpac bank acting chief economist Michael Gordon says higher interest rates are here to stay and while lending regulations are likely to be less restrictive in the future than they have been to date, the bank’s forecast is for house prices to fall by a combined 10% over the next two years.


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Lender Flt 1yr 2yr 3yr
AIA 5.95 4.85 5.35 5.65
ANZ 5.94 5.95 6.40 6.59
ANZ Blueprint to Build - - - -
ANZ Special - 5.35 5.80 5.99
ASB Bank 5.85 5.35 5.80 5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - 5.35 5.69 5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 5.95 6.29 6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - 4.75 - -
Co-operative Bank - Owner Occ 5.85 4.85 5.35 5.65
Co-operative Bank - Standard 5.85 5.35 5.85 6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 ▲5.35 ▲5.85 -
Heartland Bank - Online 4.10 ▲4.90 ▲5.29 ▲5.59
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 ▲5.35 ▲5.80 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 ▲6.19 ▲6.69 ▲6.79
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 ▲5.19 ▲5.69 ▲5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 5.55 6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 ▲5.65 ▲6.09 ▲6.19
SBS Bank Special - ▲5.15 ▲5.59 ▲5.69
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank ▲6.30 ▲5.65 5.79 ▲6.45
TSB Special ▲5.50 ▲4.85 4.99 ▲5.65
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 5.95 6.29 6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - 5.35 5.69 5.99
Median 5.87 5.35 5.77 5.99

Last updated: 30 June 2022 9:19am

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