Mortgage broker to take home loan fight to Parliament

Friday, 24 December 2021

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.

Mortgage broker John Bolton will take his campaign to have home loans excluded from lending law changes to Parliament.

Bolton has become the focal point for mortgage broker protests over new responsible lending laws introduced on December 1, which they say are preventing young buyers from getting on to the property ladder, and stripping the profitability out of their businesses.

The rules require banks to put extra scrutiny on whether borrowers can afford the loans they apply for - the result has been described as a 'credit crunch” and 93 per cent or brokers say it’s getting harder to get finance.

Bolton has gathered the signatures of just under 7000 supporters through a petition on Change.org.nz accusing the Government of incompetence in creating laws that were only supposed to protect vulnerable borrowers from loan sharks, but which had instead disrupted mortgage lending.

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

* Small deposit? Here's how you can get a home loan

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)

“We’re going to do a proper Parliamentary petition in the New Year, and we are going to say, ‘Thanks everyone for signing the petition’, and direct them to sign the Parliamentary petition,” said Bolton, chief executive of mortgage broking company Squirrel.

Once presented to Parliament, a petition goes through a formal process and must be assessed and reported on by MPs.

Bolton said the rules had ushered in a climate of ultra-conservatism in banks’ home loan operations, despite the very low default rate on home loans.

“When it comes to home loans, there was no problem to fix. ANZ, which has 30 per cent of the market, reports a home loan arrears rate of 0.50 per cent. That means in what was a pretty tough year, only one in every 200 homeowners missed a mortgage payment,” Bolton said.

“The law change was designed to protect vulnerable borrowers from shop trucks and predatory lenders, but nobody in Government thought about the wider impact on regular Kiwis trying to go about their lives,” he said.

These impacts included people being able to borrow less, and some people, who would have qualified for home loans a month ago, were now being declined.

Credit reporting agency Centrix says applications for loans have not slowed, but it won’t be until early January that figures will show whether fewer loans are being approved by banks and other lenders.

Bolton’s petition has not only been signed by mortgage brokers, angry at having to do more work to get each loan application ready to submit to banks, without being paid more to do it.

It's also been signed by people hoping to buy homes, including some who have been declined 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 service a 15-year loan and our pre-approval was not renewed.

“The new laws are a knee-jerk reaction which are poorly considered and constructed. They act only to further stop, frustrate and demoralise first-home buyers while improving things for the mega-landlords. They're counterproductive and now make homeownership near impossible for those who have a proven, stable, solid financial track record.”

First-home buyer Chris Bennet said: “We have just had our mortgage declined due to these new rules - a mortgage that would have been approved on November 30. The bank confirmed this. We are not a vulnerable borrower, but the rules are now such that the person lending us the deposit also needs to be in a position to service the complete loan should we default.”

“Our parents were happy to allow their freehold property to be used, but because they are retired they do not have enough income. It now means my wife and I are now out of the market for at least five years until we can get together a 10 per cent deposit together,” he said.

“If there is no change we may need to look overseas to live. This Government was meant to be making it easier for us first-time buyers, but all we see is new and higher hurdles to jump.”

Other people signing the petition told of how much harder and longer home loan applications had 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 at getting a pre-approval the hoops were horrendous.”