How are CCCFA changes impacting the lending space?

Cameron Marcroft, director, Loan Market Central, joins NZ Adviser TV to explain how the CCCFA has impacted the lending space, the biggest challenges his clients are facing, and why it’s increasingly important to use a mortgage adviser. 

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Narrator: [00:00:14] Loan Market Central was founded in 2016 by Cameron Marcroft. In order to meet the growing demand of Kiwis needing better solutions when it comes to their home loans. Since then, the company has grown to 11 employees and prides itself on its relationship with its clients. With its headquarters in Remuera. Last year, loan market Central helped over 325 customers with their financial needs, securing more than $255 million in mortgages. For this special episode, we're at Loan Market Central's headquarters, catching up with mortgage advisor Cameron Marcroft. He will give us an update on major market issues affecting the broker community.

Cameron: [00:01:00] The CFA has had a huge impact on the lending environment. Banks are now having to go through bank statements and look through expenses from the last three months and then add them into their new budget. Whereas previously, clients might be able to say, Hey, because I'm taking on a new mortgage, I'm not going to have that gym membership or I'm not going to be spending here and there. I'm going to be on a new tight budget. And so that ultimately affects how much people can borrow in the long run. I guess the hardest part for clients has been able to interpret the rules and work out how to get those results. So working with your mortgage adviser is critical to this. Previously to the CFA. The non-bank space was quite small. With these changes we're seeing more and more clients using the non-banks where the interest rates aren't that much higher than a bank. They could be a holding ground for clients for 1 to 2 years, then going back to the banks so they're able to get into a property. So that has given the clients a lot more opportunity to buy their first house. The biggest challenges our clients have, I guess, is around the first home buyers and especially in an Auckland market where property values have gone up a lot and that with their deposit isn't quite at 20%. The banks have made it very tough and the banks are opening a little bit and having we're having small windows where we can help those first home buyers. But also the CFA has made those lending requirements for first home buyers harder. Interpreting how to navigate the best scenarios through the different banks I think is a big challenge for our clients and that's our job to take care of that pain and help them through that process. It's hugely beneficial using a mortgage advice. There's many different reasons why. First and foremost, navigating your way through many different banks and non banks to find the best solution for you and your needs. It's so many different policies, calculators. That we need to understand and your position to get that best result. Secondly, and I think what is really important is the structure and your mortgage not only just getting into the mortgage, but we've got to help you get out of it. We're going to give you ways. We're going to review your mortgage every year. We're going to tweak it because as your circumstances change, we need to tweak your mortgage to limit the amount of interest you pay the banks. As well as that our service is completely free as the banks remunerate us. Real tough market at the moment for less than 20% deposit borrowers. However, we do have options and actually the banks do have a window open for this type of lending. It's tougher, but what we can do is understand your position and go through these scenarios. If the mainstream banks don't suit. We do have the non-banks. That could be an option and a viable option because in a year they can be reassessed and who knows, could be back into bank life, giving them an opportunity to actually buy that property. The more you can tell us about your situation, the more we can show you the options available to make an educated decision to get you into that first home. There's two particular products that I think are very helpful in paying your mortgage off quicker. A revolving credit is like a large overdraft, but what it allows you to do is have flexibility to have money available. But while that money sits in that account, it effectively has reduced your mortgage by that amount and therefore not pay an interest and offset mortgage is just as creative and also allows you to have different savings accounts. The bank then adds up those savings accounts and matches it up against the offset and says you're not paying interest on that amount and that can help you reduce your mortgage a lot quicker and make lump sum payments every year when we review your mortgage on a fixed rate to.