More than just ability to pay matters

Banks are now working under the Responsible Lending Code, which guides them on how to meet their Credit Contracts and Consumer Finance Act obligations.

Christine Lockie, of Auckland firm LoanPlan, said she dealt with one case where a man's full-time job required he work 60 hours a week, which raised concerns for the bank.

“He has worked this job for the last 18 months and makes good money – including from such things as shift allowances – but the bank declined his application because, among other factors, they regard his workload as unsustainable. This is becoming a typical example of how closely banks are looking at things," she said.

“To be honest, I don’t think it’s a bad thing that the banks are making calls on what is right for the customer – it is as it should be, but they are certainly much stricter than in the past. I think the marked drop in mortgagee sales may be one result of their tougher stance. On the other hand, it could also be as a result of lower interest rates."