ASB boss optimistic that tough new lending rules will be eased

The head also denies the bank is less willing to lend

ASB boss optimistic that tough new lending rules will be eased

ASB has rejected about 7% of home loans that would have qualified before strict new lending rules were introduced on Dec. 1, said chief executive Vittoria Shortt – the second head of a big bank to make a public claim about the impact of the new laws.

David Clark, commerce and consumer affairs minister, ordered an inquiry into the impact of the regulations and whether they needed to be changed following pressure from mortgage brokers. The amendments, designed to protect borrowers from predatory lenders, have reportedly become a key barrier to people getting on to the housing market.

Read more:
CCCFA has caused first-home-buyers to fall out of market, according to REINZ
CCCFA changes lead to exodus of first-home buyers from the market
CCCFA investigation expected in weeks as buyer numbers drop

Shortt is among those invited by Clark to share about their concerns over the new regulations. This week, ANZ CEO Antonia Watson revealed the new regulations resulted in 6% of applicants who would have got a home loan from ANZ in November no longer qualifying.

Shortt was optimistic that changes could be made to ease home loan lending without weakening protection for vulnerable borrowers, so fewer customers the bank was willing to lend would get “knocked out,” Stuff reported.

“We are very supportive of the intent of the legislation,” Shortt said. “We are very pleased to see the inquiry has been kicked off so quickly. I am pretty confident we can work through and get it to a good place. My read is people can see there have been unintended consequences and that there would be some changes.”

Shortt denied that ASB was less willing to lend when Clark questioned whether banks had become more cautious lenders due to rising interest rates, fears about economic conditions, and central bank restrictions on low-deposit bank lending, Stuff reported.

“No, we have been very comfortable with our settings for some time now,” Shortt said, despite ASB's economists forecasting an oversupply of housing by 2024. She said the bank used a 6.45% test rate when calculating whether people could afford a mortgage.

“We have got a test rate which is significantly higher than our current interest rates,” Shortt said. “We are comfortable that, as a responsible lender, we have got settings that take into account all of those factors.”