Months of starving for his dream home was "effort wasted," he says
A Wellington man lived on bread for several weeks, believing that doing so would qualify him for a home loan under the government’s strict new lending rules.
Changes to the Credit Contracts and Consumer Finance Act (CCCFA) have seen banks take an ultra-cautious approach to lending, rejecting home loans for spending on things like Uber Eats or therapy.
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“I needed to keep my spending down, and a loaf of white bread costs $1,” Deep Singh told Stuff, saying he ate only once a day, worked seven days a week across two jobs, and shut down his social life in hopes of getting his home loan approved.
Singh expected the bank to pore over his statements and payslips once he made an offer on a house, part of the controversial new requirements under the CCCFA, but had his pre-approval in late October unexpectedly cancelled for different reason instead.
The bank told him in an email that it needed to comply with “tightened Reserve Bank (RBNZ) rules.”
The RBNZ requirements, which took effect on Nov. 1, require banks to lend no more than 10% of new loans to people with a deposit less than 20%, reducing the availability of low-deposit mortgages.
Singh’s pre-approval was based on a 10% deposit – and was granted days before the new rules took effect.
“I begged them to extend it, even by just a day – they said they couldn’t,” Singh told the publication.
Briar McCormack​, ANZ senior manager external communications, explained that in order to comply with the new regulations, ANZ had to “pause a small number of existing pre-approvals” for low-deposit loans.
“For a very small group of customers with pre-approvals that expired before February 1, unfortunately we withdrew those pre-approvals in mid-January,” McCormack told Stuff.
For Singh, the timing rankled: his pre-approval wasn’t due to expire until the end of the month, and ANZ had given no indication they would cancel early.
Singh was aggrieved to miss out on a rare opportunity: a two-bedroom house within his budget, and walking distance to his family in Upper Hutt.
And the months of starving was “effort wasted,” Singh told Stuff.
