Tightening of credit availability making it tougher for home buyers

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PHOTO: An October Tony Alexander mortgage broker survey shows banks, while still willing to lend, are taking a more cautious approach. Photo credit: GettyImages

Those in the market to buy a new home may have a tougher time getting a mortgage approved, a latest mortgage survey shows.

Feedback from an October survey of 60 nationwide mortgage advisers by Tony Alexander and mortgages.co.nz shows banks are still willing to lend money – but their assessment of how much money can be borrowed is getting tougher. That includes how they view income, expenses, spare monthly cash – and deposit size.

Changes under the Credit Contracts and Consumer Finance Act (CCCFA) from December 1 require lenders to provide records of all their enquiries, including assessment of why they were satisfied the loan was suitable and affordable. For borrowers, this means “some lending which was previously approved will no longer be approved,” Banking Ombudsman Nicola Sladden said in a statement.

Former BNZ economist Tony Alexander told Newshub while overall perceptions showed a “good willingness” to lend, amid tighter incoming loan-to-value restrictions, CCCFA changes, and rising interest rates, banks also want to ensure borrowers are prepared for higher repayments.