Petition to rewrite laws that mortgage advisers say are 'working against the NZ public'

Monday, 13 December 2021

Mortgage broker John Bolton is calling for a rethink of lending law changes.

John Bolton, the frustrated chief executive of mortgage advisory company Squirrel, has started a petition to rewrite lending laws he says will make it harder for ordinary couples to buy homes and will increase the cost of getting loans.

The law changes took effect on December 1 and were designed to protect vulnerable borrowers from unscrupulous or careless lenders. The changes require lenders to take extra steps to prove that loans are affordable. But Bolton said they would reduce first-home buyers' borrowing power.

The petition on Change.org is to Commerce Minister David Clark and had 1690 signatures by mid-morning on Monday. Some left scathing messages of support.

“I can see first-hand the harm this legislation will cause to the whole broking industry,” John Schell, from SurePlan Financial, posted after signing the petition.

Reserve Bank governor Adrian Orr voiced concern in August about the situation recent home buyers might soon be in, and since then prices have risen rather than fallen. (Video first published August 19, 2021)

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“These new laws are working against the NZ public,” posted mortgage broker Steve Holbrook.

The law now required lenders to “dive into the details” of borrowers lives in a way they have never had to before, which had helped drive a wave of “ultra-conservatism” among banks, Bolton said.

In support of his petition, Bolton posted: “This has significantly increased the time and effort to process a home loan from five working days to over 15 working days.

First-home buyers will struggle to get homes under new lending laws, home loan adviser John Bolton says.

“It has increased the amount of paperwork and inefficiency, and this will result in fees passed on to consumers. New home borrowers can expect to pay establishment fees going forward of $500 to $1000.

“It will reduce the borrowing power for first-home buyers.”

The changes came as first-home buyers were already having to cope with loan to value restrictions imposed by the Reserve Bank of New Zealand Te Pūtea Matua, and they could soon face debt-to-income restrictions as well.

He said the changes would also affect small business owners who would find it increasingly difficult to raise capital using their family home.

Bolton said the lending law changes were designed to protect vulnerable borrowers, not get in the way of people buying homes.

“When it comes to home loans there was no problem to fix,” he said. “ANZ, which has 30 per cent of the market, reports a home loan arrears rate of 0.5 per cent.”

He warned the impact could be felt more widely than first-home buyers.

“If you have an emergency, good luck trying to borrow from the wealth tied up in your house,” Bolton said.

“It will be near impossible to own a home and have kids,” he said.

“This is a government-induced credit crunch that will starve small businesses of access to capital just when they need it.”