Mortgage broker John Bolton calls for rethinking changes to the loan law.
John Bolton, the frustrated managing director of mortgage advisory firm Squirrel, has started a petition to rewrite loan laws that he says will make it harder for ordinary couples to buy homes and increase the cost of obtaining loans.
The changes to the law came into effect on December 1 and were designed to protect vulnerable borrowers from unscrupulous or negligent lenders. The changes force lenders to take additional steps to prove that loans are affordable. But Bolton said they would reduce the borrowing power of first-time homebuyers.
The petition is addressed to Commerce Minister David Clark, and at 10:40 a.m. Monday, at 10:40 a.m. Monday, it had 1,690 signatures. Some have left scathing messages of support.
“I can see firsthand the harm this legislation will cause to the entire brokerage industry,” said John Schell, of SurePlan Financial, after signing the petition.
* New loan laws are a “nightmare” for people looking for home loans
* Government passes responsible lending laws with a hammer
* Falling mortgage rates are expected to skyrocket as responsible lending changes take hold
âThese new laws work against the New Zealand public,â said mortgage broker Steve Holbrook.
The law now required lenders to “dive into the details” of borrowers’ lives in ways they had never had before, which had helped spark a wave of “ultra-conservatism” among banks , Bolton said.
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Reserve Bank Governor Adrian Orr expressed concern in August about the situation recent homebuyers might find themselves in, and since then prices have been rising rather than falling.
In support of his petition, Bolton wrote, âIt dramatically increased the time and effort required to process a home loan from five business days to over 15 business days.
âThis has increased the amount of paperwork and inefficiency, which will result in costs being passed on to consumers. New home borrowers can expect to pay a set-up fee in the future of $ 500 to $ 1,000.
And, he said, âIt will reduce the borrowing power of first-time home buyers. “
The changes came as first-time homebuyers were already facing loan / value restrictions imposed by Reserve Bank of New Zealand Te PÅ«tea Matau, and they may soon be facing debt restrictions as well. income.
He said the changes would also affect New Zealand small business owners who would find it increasingly difficult to raise capital using their family home.
Bolton said the loan law changes were designed to protect vulnerable borrowers, not prevent people from buying homes.
âRegarding home loans, there was no problem to solve,â he said. “ANZ, which has 30% of the market, reports a mortgage arrears rate of 0.50%.”
He warned the impact could be felt more widely than first-time home buyers.
âIf you have an emergency, good luck in trying to borrow the wealth tied up in your home,â Bolton said.
âIt will be almost impossible to own a house and have children,â he said.
And, he said: “This is a government-induced credit crunch that will deprive small businesses of access to capital just when they need it.”