Commerce and Consumer Affairs Minister David Clark is looking at making further changes to the code and regulations, on the back of a consultation process launched in April.
He has received a report and advice from officials and is considering what, if any, further actions are required. The report is due to be released in July.
Mortgage broker John Bolton, who petitioned the Government to change the rules, was pleased Clark was changing the lending rules "with a degree of urgency".
He said initial changes are a "good start", but hoped the Government went even further in watering down the rules.
Annual growth in lending for housing has fallen since the existing Responsible Lending Code took effect, from 11 per cent in November to 8.1 per cent in April.
Meanwhile the annual change in consumer lending has improved over this time from -7.1 per cent to -6.6 per cent.
It's difficult to know how much of an effect updates to the CCCFA have had on the flow of credit. Their implementation has coincided with the Reserve Bank aggressively hiking interest rates and reinstating loan-to-value ratio restrictions for mortgage lending.
Nonetheless, it's worth noting that since credit conditions have been tightened, borrowers have increasingly been turning to non-bank lenders, like finance companies.
The annual growth rate in housing and consumer lending by non-bank lenders has been double that of banks, at 14.4 per cent in April.
New Zealand Bankers' Association chief executive Roger Beaumont said the Government's "rushed attempt to fix the problem" won't make a difference for most borrowers.
"Most of the existing requirements remain in place, meaning customers will still have to provide detailed information about their spending, resulting in a more painstaking process and more loan applications being declined than before the December rule change," Beaumont said.
"While we agree with the Government's aim to protect vulnerable consumers from unscrupulous lenders, the one-size-fits-all approach for all lenders and all loan types means banks don't have the same discretion or flexibility they used to."
Here is a rundown of the confirmed set of changes to the Regulations and Responsible Lending Code in the Ministry of Business Innovation and Employment's words:
• Remove regular 'savings' and 'investments' as examples of outgoings that lenders need to inquire into when assessing the borrower's likely expenses.
• Clarify that when borrowers provide a detailed breakdown of their future living expenses, and these are benchmarked against robust statistical data, there is no need to also inquire into their current living expenses from recent bank transactions.
• Clarify that when lenders estimate expenses from recent bank transaction records, they can ask the borrower about how expenses are likely to change once the contract is entered into.
• Clarify that the requirement to obtain information in 'sufficient detail' only relates to information provided by borrowers directly (e.g. ensuring that expense categories on application forms are sufficiently detailed) rather than relating to information from bank transaction records.
• Provide further guidance that a 'reasonable surplus' is not required if the lender has applied adequate buffers and adjustments to income and expenses.
• Provide alternative guidance and examples for when it is 'obvious' that a loan is affordable, such that a full income and expense assessment is not required.
