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Speaker 1: From today. The strict loan affordability regulations are gone or

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Speaker 1: certainly changed from the Credit Contracts and Consumer Finance Act,

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Speaker 1: henceforth known as the Triple CFA, which is a lot

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Speaker 1: more catchy. And this ends the bizarre inquisitions that the

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Speaker 1: banks used to make into your personal life before they

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Speaker 1: denied you alone. Here's the big question that I've got

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Speaker 1: for our Wellington Business editor, Jeanne tim Trady. Hello, Jenney,

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Speaker 1: Hey Andrew. This is going to make getting money easier.

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Speaker 2: I don't think it's going to make a really big

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Speaker 2: difference in the current environment unfortunately, but the positive is

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Speaker 2: it should be quicker to get a loan. So basically

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Speaker 2: Commerson Consumer Affairs Minister Andrew Bailey has taken an ax

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Speaker 2: to the Triple CFA. He's basically put a red pen

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Speaker 2: through eleven pages of regulations. These are the ones that

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Speaker 2: require lenders to be really prescriptive about the checks they

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Speaker 2: do and whether you can or can't afford to take

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Speaker 2: out a loan, so a mort googe or another type

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Speaker 2: of loan for a car or for some shopping you

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Speaker 2: need to do with something like that. So instead of

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Speaker 2: requiring lenders to check your bank statements with a fine

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Speaker 2: tooth comb to see if you can afford the loan.

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Speaker 2: Now lenders can use their own discretion, so they can

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Speaker 2: take different approaches for different customers. It's really putting the

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Speaker 2: onus on the lender to decide how best to assess affordability.

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Speaker 2: The issue, Andrew, is, at the moment interest rates are

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Speaker 2: really high, and that is the thing that's preventing people

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Speaker 2: from getting loans. So you know, whether you buy too

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Speaker 2: much takeaways or whatever isn't as much of an issue

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Speaker 2: as the pure fact that the interest rates are just

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Speaker 2: really high. The thing that will help is if these

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Speaker 2: processes that the lenders have to follow are a bit

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Speaker 2: more simple, that should speed up the loan application process.

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Speaker 1: I was talking earlier to such a Lockley who's from

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Speaker 1: the social lender money sweet Spot, and I said that

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Speaker 1: the rules were drawn up to stop loan sharks in

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Speaker 1: the first place, but the problem with them, the unexpected

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Speaker 1: consequence was it also stopped banks from issuing smaller loans

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Speaker 1: in particular, which ironically drove people back to loan sharks again.

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Speaker 1: So now my question will be, now, with all those

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Speaker 1: regulations gone, will the loan sharks be back in business?

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Speaker 2: Well, that is such a good question, Andrew, And I

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Speaker 2: mean I don't know the answer to that. That the

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Speaker 2: tinkering that's happened with this piece of legislation has been extensive.

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Speaker 2: So the previous government relaxed the rules in May twenty

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Speaker 2: twenty three in July twenty twenty two after changes made

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Speaker 2: in December twenty twenty one were deemed to be too

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Speaker 2: heavy handed and too problematic. So it's yet to be

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Speaker 2: seen whether Andrew Bailey has struck the right balance here.

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Speaker 2: I mean, it is really difficult when so many different

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Speaker 2: types of lending are captured by one piece of legislation.

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Speaker 2: You know, it's very different if you're trying to get

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Speaker 2: a five hundred thousand dollars mortgage versus if you're trying

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Speaker 2: to get one thousand dollars for groceries, if you know

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Speaker 2: what I mean.

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Speaker 1: I absolutely know what you mean. But also today, I

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Speaker 1: mean it was like it was like right after a budget.

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Speaker 1: You know, this was the day. It was like match

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Speaker 1: thirty first really so many changes, loans to value ratio

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Speaker 1: went as well, and everybody say, this is all a

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Speaker 1: great day for first home buyers. And I decided I

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Speaker 1: came up with the idea that maybe we're still in

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Speaker 1: the dark tunnel, but we're a third of the way

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Speaker 1: through and we can see the light right now, and

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Speaker 1: it's about time we started getting our mojo back. What

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Speaker 1: do you reckon?

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Speaker 2: Well, I'd love love it if we got our mojo back.

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Speaker 2: I mean, you know, some of these rules are really

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Speaker 2: there to protect us from ourselves, you know, in terms

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Speaker 2: of the loan to value ratios are another one. You know,

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Speaker 2: it is important that people don't take out more debt

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Speaker 2: than they can realistically service. So I think with the

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Speaker 2: triple CFA changes, he said LVR rules, the Reserve Bank

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Speaker 2: is loosening them only a little bit, so they're not

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Speaker 2: as heavy handed in terms of the size of the

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Speaker 2: deposit that you need when you borrow money. But then

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Speaker 2: they are introducing a new rule which is requiring you

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Speaker 2: to have a certain amount of income compared to the

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Speaker 2: debt that you want to take out. That's those debt

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Speaker 2: to income rules that have been debated now for many years.

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Speaker 2: So there's quite a cocktail of things happening in the background.

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Speaker 2: The thing that I think everyone is looking out for

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Speaker 2: is interest rates and interest rate cuts and whether the

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Speaker 2: first o CR cut will in fact be in coming months.

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Speaker 1: Yes, but at the same time, today we hear about

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Speaker 1: inflation in Australia and we're expecting interest rate rises over

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Speaker 1: there to the four percent level, so you know, you know, boy,

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Speaker 1: it is a big milanch. Hey, Jiney, I thank you

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Speaker 1: so very very much for your time today, Jenne Tebrishaney

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Speaker 1: Tim Triny, who is our well in to business editor.

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Speaker 2: For more from Heather Duplessy Allen Drive, listen live to

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Speaker 2: news talks.

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Speaker 1: on iHeartRadio.