Before these changes, spending on things like takeaways and Netflix was considered discretionary. 

That means you could cut back on it if you needed too. So the banks didn’t have to look at those expenses when approving your home loan.

But under the tougher rules, these things were treated as fixed expenses. Banks had to assume you’d keep spending that way even after you got the mortgage.

Unsurprisingly, these changes were openly slammed ... and not just by mortgage advisers. The media and everyday Kiwis came out swinging and Labour initially rolled back some of the toughest changes. 

More recently, National has rolled those rules further back.

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• How do I get a mortgage and pay it off?
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What about now? Does the CCCFA still exist?

Yes – the CCCFA is still very much alive. But it’s a far less intense version than it was back in 2021.

Since then, there’ve been a few rollbacks – with the biggest one happening in July 2024 under the National-led government.

The basic principles remain. So, banks still must lend responsibly. But the way they assess that has become far more pragmatic.

Change #1 – Banks understand that you’ll spend less when you get a mortgage

Banks now have more flexibility. 

A bunch of subscriptions or spending on your statement doesn’t automatically kill your chances. 

A good adviser can now explain to the bank that those expenses would be scaled back if interest rates go up.

For instance, they'd say: "This person won't be spending $200 a Kmart every week if they got a mortgage".

Banks are more willing to have that conversation now.

Change #2 – Credit cards

This is a big one. 

Previously, if you had a $10,000 credit card the bank would consider you to have maxxed that out … even if you haven't used it at all. 

They'd then work out the minimum repayment you’d make if you maxxed out the card. 

This is now being scaled back. If you pay off your credit card regularly, this might not have any impact on your loan.

Change #3 – Rental property income

Previously, banks would scale back both:

• The rent
• Specific costs for investment properties

So they might say: “Before we give you this loan, could you still afford it if you only got 75% of the rent and you had to pay all the rates, insurance etc.”

Now, most banks just scale the rent by 25% to account for those expenses. 

They don't double-dip. That makes it easier to get a mortgage approved for an investment property.  

What does all this mean for borrowers?

In short, it’s easier to get lending. It’s not as hard as it used to be in early 2022.

Banks no longer use expensive software to scrape and analyse your spending habits.

One bank doesn't even need to see your bank statements. They figure: If your broker gives the green light, you’re good. 

So the responsibility has shifted more to your broker. 

(But if you go direct to the bank, they’ll still want to see everything.)

The old advice of “live like you already have a mortgage at 8% for three months” no longer applies. 

You still need to show tidy accounts, but you don’t have to live like a pauper.

I recently worked with a client who had messy accounts: missed payments, unarranged overdrafts ... the works. But we put together a plan, cleaned things up, and sent a self-declaration to the bank. 

The bank approved it.

That simply wouldn’t have happened in 2021.

Will the CCCFA go back to being crazy again?

Maybe. 

Here’s the thing, bank policies go in cycles. Things ease up – then they tighten again. I’ve seen it before.

Not needing bank statements, or forgetting about credit card limits … that stuff has all been around before. 

But all it takes is a bank that says: “Oh we’re actually going to change this up”. Then things will go back to being harder or easier. 

If you look at 50 years of banking, it’s never staying the same. It keeps us brokers on our toes. 

But at the end of the day, responsible lending is a good thing. As long as it’s not stopping people who genuinely can afford a mortgage from buying a home.

For now, the door’s open a little wider. And that’s a win.