lending rules

PHOTO: Commerce Minister, David Clark said the issue was how the rules were being interpreted.

The Government is making changes to its controversial lending laws, following complaints that it was preventing some people in decent financial positions from being granted mortgages and other loans.

The rules were changed in December in an attempt to protect people from loans they couldn’t afford.

However, it meant that banks and other lenders had to look at people’s spending at lot closer when assessing financial situations, especially when it came to their expenses.

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“Somebody would go bungy jumping and then the bank would say, ‘how often do you go bungy jumping?'” economist Tony Alexander said.

He believes part of the problem was that banks were worried receiving huge fines if they didn’t implement the new rules correctly, they became incredibly cautious.

Commerce Minister, David Clark said the issue was how the rules were being interpreted.

He said the rules have now been clarified to make it more straightforward.

This includes specifying that when borrowers provide detailed breakdown of future living expenses, there is no need to inquire into current living expenses from recent bank transactions.

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Lenders also don’t need to treat any regular savings a loan applicant has as expenses.

“In very simple terms, it means the banks do not have to go delving through your bank statements for the past few months,” Alexander said.

They can take your word on what your expenses will be in the future.”

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