Potential first home buyers were left outraged last year when the Government enacted stricter requirements for the Credit Contracts and Consumer Finance Act. These reforms had the admirable aim of preventing unscrupulous lending practices that had resulted in people being saddled with unaffordable repayments, eye-watering debt and on the fast track to financial ruin (loan shark lending). The changes required lenders to confirm that the borrowers had the ability to repay their loans in light of their living expenses, among other changes.

However, this resulted in banks taking an overly cautious approach to the new legislation, with the consequence that people were denied home loans due to their seemingly innocuous spending choices such as takeaways, Netflix and the occasional flat white. Staggeringly, lending commitments in banks plummeted from $7.9 billion in December to $4.6 billion in January 2022 alone.

But all is not lost! Due to the universal outrage of bank customers, the Government is slightly “tweaking” their amendments to the CCCFA to stop these unintended side-effects. They are clarifying that potential borrowers won’t need to provide bank transactions on current living expenses when providing information on future living expenses. As well as clarifying that the requirement for banks to get information in ‘sufficient detail’ relates only to information provided by the borrowers and not information on their bank transactions. The Government is also removing ‘investments’ and ‘savings’ from a list of examples for lenders to investigate when looking into a potential borrower’s future expenses.

But we may still feel the sting of those amendments for a little while longer and these tweaks won’t be in effect until June. Coupled with the skyrocketing cost of living, the only certainty at the moment seems to be uncertainty.