Government's changes to lending rules will help home buyers, says Business commentator Bernard Hickey

The latest changes by the Government to the lending rules will make it easier for Kiwis looking to borrow to buy a house, according to a business commentator. 

Commerce and Consumer Affairs Minister David Clark unveiled the changes on Tuesday, which are aimed at ensuring Kiwis won't be unfairly penalised when trying to borrow to buy a house. 

The changes announced by Clark include narrowing the expenses considered by lenders to exclude discretionary expenses, reducing 'double counting' of expenses associated with credit cards and buy-now-pay-later schemes and helping make debt refinancing or consolidation more accessible for borrows. 

It isn't the first time the rules have been changed recently, with the responsible lending laws and regulations tightened at the start of December to reduce the harm done by irresponsible lending.

Clarke then ordered a review, and changes were made in June, but lenders complained they didn't go far enough. 

Business commentator Bernard Hickey told AM on Wednesday the changes announced by Clark on Tuesday will be helpful for Kiwis home buyers.

"This will make it a little bit easier for people who are looking to borrow to buy a house, particularly if they've done some buy now, pay later lending as well, or they've got a couple of credit cards," Hickey told AM co-host Melissa Chan-Green. 

"Under the new rules, you had to be very specific about which credit cards you got and how much buy now, pay later you'd been doing, which was frustrating for a lot of people who could afford to buy a house. 

"But these new rules, which were designed to protect people from loan sharks and from too much high-interest rate borrowing, but for a lot of home buyers, they're not in that situation, so this will ease the pressure somewhat." 

Hickey told AM the Government has copped a lot of flack for the changes they've made when he believes the banks would've made the same changes anyway.  

"It's not that bad and I suspect what's happened here is a lot of people were told no by their banks in November, December, January, and February and everyone including the banks, have said it wasn't our fault, it's the Government's fault," he said.

"It's those bureaucrats' fault when actually behind the scenes, the Reserve Bank had just tightened its own loan-to-value ratio rules and the banks themselves were looking to take a step back from some of the very high prices that were being paid October, November. 

"So I suspect there has been quite a bit of blaming of the Government for changes that banks were going to do you need to do anyway."   

Watch the full interview with Bernard Hickey above.