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CCCFA - what’s changed now?




Last week it was announced that the highly criticised changes to the Credit Contracts and Consumer Finance Act (CCCFA) would be softened.


If you have been looking to buy a house, then you will have likely have felt first hand how hard the December changes to the CCCFA were making things for buyers (and in particular first home buyers). We were hearing stories of people being turned down for a mortgage because they spent “too much” on petrol, their dog, and even a one-off trip to Kmart. Spending was intensely analysed and it was not taken into consideration that spending habits might be one-offs or may change after a loan was secured.

After much pressure from the public and industry experts, the Commerce and Consumer Affairs Minister David Clark announced that changes to the Act would be made to allow banks to take a rational approach to future spending. So what changes have been made?


A big one that will likely have the most change for buyers is the removal of borrowers needing to prove and explain current spending habits in detail. Only future living expenses will be broken down and clarified. There is some leeway in there now for spending, with the intention that once a loan is secured, current spending habits will change. It’s well known that many people saving to buy a home may spend a little more on luxury purchases while saving, but once a mortgage payment is coming out of their bank account, this becomes the priority.


Another key change is that savings and investments are now examples of outgoings that don’t need to be analysed as a part of future expenses. Under the current changes, KiwiSaver deductions were being included, however many may choose to lessen their contribution once they have purchased a home, and this wasn’t being considered.


These changes are expected to take place from early June, however banks may need another month or so to adjust their policies. With this timeframe in mind, we still urge you to get in touch as soon as possible so we can guide you through these new changes and what’s required at each step.


Click here to get in touch with a Better Choice Home Loans mortgage advisor.

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