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John MacDonald: Feels like big brother is being put in his place — and it's brilliant

John MacDonald,
Publish Date
Mon, 22 Apr 2024, 1:33pm
Photo / Getty Images
Photo / Getty Images

John MacDonald: Feels like big brother is being put in his place — and it's brilliant

John MacDonald,
Publish Date
Mon, 22 Apr 2024, 1:33pm

It feels to me like big brother is being put in his place. And I think it’s brilliant.

Well, maybe not completely in his place. But we’re getting there, with this announcement by the Government that it’s going to make it easier for us to get loans and mortgages by giving banks and finance companies more flexibility to decide how they assess whether someone can afford a loan or not.

And it’s going to do that by getting rid of 11 pages of stupid regulations that were introduced in December 2021. You know the ones I’m talking about. The ones that made it quite alright for banks to check how often you use Uber Eats and Netflix when you want a loan..all that nonsense.

The last government brought them in to crack down on loan sharks. Eventually, realised it was a bit of a cluster. Eventually, started to ease things a bit. But the current government is stepping in and getting rid of all that nonsense completely.

I saw a guy on the news last night involved in the lending game and he said when those rules came in two-and-a-half years ago, the time it took to process a loan application went from about two hours to eight hours.

But that’s just the mechanics. The more important thing in all this for me isn’t about how long it takes to process a loan application, the important bit for me is how the Government is basically saying ‘if you think you can do it, then go for it’.

I mean, it’s the banks and other lenders that will have the final say, of course. But with all these checklists put in place by the last government getting the heave-ho, hopefully, we’re heading back towards times a little bit like when we bought our first place.

We weren’t all that long back from living overseas. The money we’d made over there was spent doing stuff - so we didn’t come back with any big nest egg to spend on a house. Maybe we should’ve. But let’s not get into woulda coulda, shoulda.

So we had a chat to the bank. Found a house. Went to the auction. Ended-up buying the thing and managing to pay what, compared to the deposits that have been required in recent times, a pretty small deposit. And there we were, in our first home.

And we did it because we backed ourselves. Yes, the bank backed us too. But we knew that, if we needed to cut back on spending to pay the mortgage, that’s what we would do. We didn’t have the bank saying ‘how many flat whites did you buy last week?’

Bear in mind that this was about a million years ago and things like Uber and Netflix hadn’t even been invented. But you get the gist. We backed ourselves. The bank backed us. And sometimes the way things were done in the past aren’t always bad. 

I don’t know if the Government has thought about it this way, but these changes in the lending rules actually deliver on all the rhetoric we heard from National, especially, before the election - about New Zealand needing to back itself more.

And when you back yourself, you don’t overthink things. Because when it comes to buying something like a house, you actually don’t have to go overboard on the over-thinking.

Yes, the local schools can be an important factor. Transport routes. All that stuff. But, when it comes down to it, keep it simple.

Do you like the house or the apartment? Yes. Do you want to buy it? Yes. Are you confident you can pay the mortgage? Yes. Do you know what will happen if you can’t pay the mortgage? Yes, the bank will take it off me. Great. You’re good to go.

But with these 11 pages of regulations that the Government is getting rid of…with these, it’s over-thinking central. And good on the Government.

Labour doesn’t think so, of course. It's saying today that these changes are going to put people at greater risk of being ripped off by loan sharks.

My response to that: is that if decent lending operators are more free to lend money, then people won’t need the loan sharks. Which is exactly what Commerce and Consumer Affairs Minister Andrew Bayly is saying. And I like what I’m hearing from him.   

But. And there is a but. Although, it’s not a big enough but for me to say the Government’s doing the wrong thing.

The question I’ve got is whether this is actually the right time to be making it easier for people to go into debt or to increase their debt.

You might have seen what New Zealand Herald Business Editor-at-Large Liam Dann was saying over the weekend about the potential for 30,000 people to lose their jobs over the next year.

He reckons the 3,000 that are already earmarked to go in the public sector are just the beginning. Which is pretty grim.    

But, overall, I don't think this is the wrong time to be making it easier for people to go into debt or to increase their debt.

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