The government's moves to ease lending rules blamed for causing a credit crunch at the start of 2022 may be thwarted by financial institutions.
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Credit bureau Centrix head Keith McLaughlin said there were no signs yet that the changes made in July 2022 to the Credit Contracts and Consumer Finance Act (CCCFA) had made it easier to get a loan.
The rules were eased to limit the scope and detail of the information that lenders are required to gather when making decisions on credit, after complaints that previously creditworthy people were being turned down for loans.
But some lenders had not changed their application of the CCCFA because it had been working to their advantage, McLaughlin said.
"Some of the anecdotal feedback we've received is that some lenders won't make any changes because they're finding the risk weighting of their portfolio is a lot better than it used to be, and while the lending may be less than it was, the quality is much greater.
"So some of our clients are going to maintain the CCCFA standards that were put in place back in December."
Meanwhile, the Centrix report for July showed the demand for credit had fallen and the level of arrears had risen in the face of the slowing economy, higher interest rates and inflation.
The demand for credit was down 6 percent on a year ago, with mortgage applications 29 percent lower, buy-now-pay-later new enquiries were 30 percent lower, but going against the trend was a lift in demand for personal and auto loans.
The number of accounts in arrears eased slightly on the previous month but were 14 percent higher than a year ago.
Housing arrears continued to fall but a lift in arrears for car loans was to be watched.
"Products like mortgages and vehicle loans - secured lending products - are usually the last credit repayments people let slip, which indicates we could be starting to see signs of financial stress," McLaughlin said.
