“Banks are particularly interested in the borrower’s ability to repay the loan, and the security provided for the loan. People seeking home loans need to be up front with the bank about their personal circumstances, such as existing financial obligations and outgoings.”
“We’re particularly pleased that the FMA has confirmed there are no systemic conduct issues around the use of the benchmark. That provides an assurance that banks can use the rate with confidence,” Scott-Howman says.
Reserve Bank of New Zealand (more…)
NZBA has come out against the Reserve Bank adding a debt-to-income ratio tool to its macro-prudential toolkit. But the bank lobby group has suggested a serviceability interest rate, or SIR, as a potential alternative.
The New Zealand Bankers’ Association has repeatedly denied claims its members apply “blanket de-risking” policies. Rather it says banks consider prospective clients’ risks on a case-by-case basis.
“They only provide information to the Police when they receive a production order that legally requires them to provide information or when the request complies with the Privacy Act.”
Reserve Bank of New Zealand
Reserve Bank of New Zealand
Ministry of Justice
Debt can finance personal, household and business needs and aspirations. That’s the New Zealand Bankers’ Association’s response to Money Week’s big question: what does debt do for you?
“We often need to borrow money to buy our own home or get a business off the ground. That’s the kind of debt our banks are here to support,” says New Zealand Bankers’ Association chief executive Karen Scott-Howman.
“This is often seen as ‘good debt’. Borrowing for something that’s likely to retain or grow in value over time makes sense. Borrowing for things that will lose value, or ‘dumb debt’, isn’t such a good idea.
“As responsible lenders, banks work hard to ensure their customers know what they’re signing up to when they take out a loan. Being clear on your obligations as a borrower is really important.
“Banks are always willing to provide advice about the lending products and services that are right for your particular circumstances. It’s worth having a chat and checking out your options.”
Tips for managing debt include:
- having a plan to pay off your loans
- asking your bank how you can be debt-free faster
- avoiding ‘dumb debt’
- only borrowing for what you need.
Money Week is organised by the Commission for Financial Capability and runs from 14 to 20 August.
More information is available at: www.sorted.org.nz/moneyweek
ENDS