In response to the Reserve Bank imposing limits on higher loan-to-value ratio mortgage lending today, the New Zealand Bankers’ Association said banks would continue to work hard to meet their customers’ needs within the new restrictions.
“People should be aware they may be declined loans because of the new restrictions imposed by the Reserve Bank. It’s worth talking to your bank about your individual needs and circumstances,” said New Zealand Bankers’ Association chief executive Kirk Hope.
“While the lending restrictions will adversely affect some businesses and householders seeking low deposit loans, our members are committed to meeting their obligations as registered banks and will comply with the new lending requirements.
“Most small New Zealand businesses raise investment capital through equity in their homes. LVR caps may limit their ability to invest in their businesses.
“The lending limits may also make it more difficult for first-home buyers and home-owners seeking a top-up loan for renovations.
“We have reassured government that as an industry we will respond constructively and responsibly to the new lending limits.
“Our banks are very competitive, and will continue to do all they can to meet the needs of all sectors of their customer base.
Hope added that the real issue is a lack of housing supply in some parts of the country, not the availability of cheap credit.
“While there are positive moves to deal with the supply issue, that will take some time to be resolved. Credit growth, currently at around 5%, is not driving this.”
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Kirk Hope talks to Kathryn Ryan on Nine to Noon about proposed lending limits and the impact on first-home buyers.
One in every two to three first-home buyers could be shut out of the housing market as the Reserve Bank forges ahead with controversial restrictions on home loans.
Bankers’ Association chief executive Kirk Hope said the rules would have “perverse consequences” and lock buyers out of the market.
The Bankers’ Association is seeking to create a database of house insurance contracts to allow mortgage lenders to keep tabs on whether borrowers are keeping their homes adequately insured.
Reserve Bank of New Zealand
The banking industry is warning customers to be alert to a phishing scam capitalising on publicity around the legal action on bank fees.
A class action against banks in Australia has seen a large number of customers targeted by fraudsters claiming to be from their bank.
Typically, fraudsters inform customers that for a small payment they will release fees customers are claiming in the class action. Fraudsters can contact customers by phone, text, email or in person.
“The Australian experience shows that phishing-type scams aimed at bank customers occur when there is publicity around a group action,” said New Zealand Bankers’ Association chief executive Kirk Hope.
“It’s likely that fraudsters will capitalise on the group action in New Zealand to obtain payments from customers or gain access to their personal banking details.
“They are unlikely to target only customers who have signed up for the bank fee case. All customers will be at risk because of the action.”
“Customers are reminded to safeguard information relating to their bank accounts, and never to disclose their PIN numbers or account passwords to anyone”, said Hope.
This technique is called “phishing”. It works because the scammers target hundreds of thousands of email addresses, in the hope one or two fall for it.
Banks have security sections on their webpages with advice on how customers can protect themselves and where to go to report scams.
All New Zealand banks are now required to comply with the new anti-money laundering regime, which came into force on 30 June.
Under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 all New Zealand banks have additional obligations to check customer identity and, in some cases, account activity.
“The new regime applies to all banks, and other financial institutions, and builds on existing customer identification processes,” said New Zealand Bankers’ Association chief executive Kirk Hope.
“It will mainly affect people when they open bank accounts, or if they want someone else to have signing authority on their account. People will also notice changes in some cases when depositing cash over the counter and making international money transfers. Existing customers will also be asked to confirm their ID and contact details from time to time.”
The new law aims to make it harder to disguise the profits of crimes like drug and arms trafficking, fraud, robbery, and illegal prostitution and gambling. It will also help New Zealand to meet its international obligations and improve its financial reputation overseas.
“We all have a role to play here. Banks will be asking customers to provide more information about themselves. It’s important to bear in mind the bigger picture here.”
“Banks have invested heavily to make sure they are compliant with the new regime. Most have implemented the changes ahead of the deadline to help ensure a smooth transition to the new requirements,” Hope added.
Hope said there was a risk that in capping the amount of lending done over the 80 per cent threshold it could spark third tier lenders to emerge and lend money on an unsecured basis.