A couple recalls how their bank turned down their mortgage extension application because they were going to Kmart for Christmas.
Kim Anderson-Robb and her husband from Dunedin in New Zealand’s South Island are among those already stung by amendments to the Credit Contracts and Consumer Finance Act, which went into effect on December 3.
Focused on protecting vulnerable borrowers from loan sharks, banks are now paying more attention to applicants’ spending habits before loans are approved.
Ms. Anderson-Robb recently filed for an $80,000 (A$75,000) mortgage extension to fund urgent repairs and renovations, including a rotting back deck and house rewiring after asbestos was found in the fuse box.
But her 17-year-old bank declined the loan because of a recent $187 one-time trip to Kmart, shopping another $100 to buy Christmas presents at discount chain The Warehouse, and using a credit card she hadn’t used in over a year. . year.
Kim Anderson-Robb was recently rejected by her bank for a mortgage extension due to changes to New Zealand’s credit laws
Ms Anderson-Robb claimed that the bank staff told her they were ineligible for a mortgage supplement because the couple “spent too much.”
Her husband’s daily purchase of a drink from the dairy while she was at work was also questioned.
“We’ve had a mortgage for 17 years, never missed a payment, never asked for a mortgage vacation, so I’d say we’re a pretty good customer,” a frustrated Ms. Anderson-Robb told the Otago Daily Times.
“We have good money, but they rejected our application because of a one-off trip to buy Christmas presents and a damn drink. It is stupid.’
The support worker added that she had previously had mortgage upgrades approved by the bank “with no problems.”
The couple has since decided to save for the urgent repairs needed for their home.
Kim Anderson-Robb and her husband were turned down for a mortgage supplement after a $187 shopping spree at Kmart Invercargill (pictured)
Ms. Anderson-Robb feels sorry for would-be homebuyers who may now be struggling to enter the real estate market because of recent changes to loan laws.
“It’s just so damn tough and I really feel for them,” she said.
Auckland couple Jason and Cindy Guild also had their dreams of buying a house shattered by the changed rules.
Their loan pre-approval was canceled in December, just days before they were due to bid at auction.
The couple just had a 20 percent down payment, but they were debt-free, had no children, and both had high-paying jobs.
“We thought this government was trying to put us in houses, but it doesn’t seem like it is,” Mr. Guild told Stuff.
‘It cost $20,000 below what I would pay for it’
Many potential Kiwi homebuyers are now struggling to enter the real estate market due to changes to the loan laws that came into effect on Dec. 3 (stock image)
New Centrix figures released Friday show that the proportion of home loan applications approved has fallen from 36 percent to 30 percent in the past month.
Financial advisory New Zealand has requested an urgent meeting with the government to address industry concerns over recent changes to the credit contracts and consumer finance law
Chief Executive Katrina Shank says mortgage brokers are seeing a significant reduction in pre-approvals that don’t renew and lending to all borrowers is being cut as a result of the new requirements.
“Some stories defy almost all logic, such as being refused a loan or being cut drastically for overspending on coffee and takeaways,” Ms Shank said in a statement.
“For many Kiwis, all this means they can no longer get a mortgage on the same amount of credit that would have been approved before.
“We believe that the intent of this legislation was not to reduce the availability of credit for the average Kiwi who was not vulnerable and could previously afford a mortgage.
Financial advisory New Zealand has requested an urgent meeting with the government to allay concerns over the law changes (Auckland apartments pictured)