Changes to Lending

Changes to the Credit Contracts and Consumer Finance Act 2003 (CCCFA), combined with home loan restrictions to the loan-to-valuation ratio (LVR) limits, are impacting both home loan and personal loan borrowers.

Whether you’re a first home buyer or in the market for a personal loan, the landscape has changed, meaning you might be finding it’s taking longer and that it’s harder to get a loan than before. So, what has caused this change?

LVR Changes

From 1 November, the Reserve Bank of New Zealand (RBNZ) brought in restrictions that meant banks can only lend 10 per cent of new home loans to owner-occupiers with deposits of less than 20 per cent. The change was brought in to help curb inflation to housing prices.

In a nutshell, this means that banks have a limited amount of low-deposit home loans they can approve – half as much as before. The result is a higher number of first home buyer loans being declined by banks, and a rise in home loan applications for non-bank home loans.


CCCFA Changes

Alongside the LVR changes, from 1 December amendments to the CCCFA mean that lenders are bound by tighter rules around responsible lending – designed largely to protect vulnerable borrowers. These changes mean that lenders must show due diligence and ensure that information provided by borrowers for a loan application meet certain affordability and suitability criteria.

Loan assessments must follow very detailed regulations, often requiring more information for applications than before. This can involve lenders asking more about the needs and objectives of borrowers, as well as further assessment when making material changes to existing lending.

The increase in information required can result in a longer time to assess loans, so you may see the time to decision of your loan increased, at least in the interim until the changes have been embedded.

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You want to borrow soon - what can you do?

If you’re looking to borrow in the future, be prepared to provide more evidence of your financial situation. You’ll need to provide at least 3 months’ worth of statements showing good account conduct, and if you’ve previously borrowed you may notice you’re being asked more questions or for more evidence than before. It’s best to apply for your lending sooner rather than later to factor in a potentially longer assessment time.

What are we doing?

At the Police Credit Union we pride ourselves on approving loans to our members as quickly and easily as possible. We’ve partnered with Credit Sense, an online service that allows you to sign in to your online banking as part of your online loan application. This automatically downloads your statements and provides an automatic assessment of your bank statements, saving time in the manual assessment of your financial situation.

If you have any questions about lending you can email us at

You can also apply for a loan here.