Mortgage advisers have slammed some banks for their "terrible" customer service and the time it is taking them to process home loans.
One adviser said one bank did not pick up a home loan for 27 days.
Banks spoken to by NZME say the Credit Contracts and Consumer Finance Act, introduced on December 1, which require more financial information, have been causing delays. Most had employed extra staff to combat the problem.
The New Zealand Bankers Association also warned the tighter regulations meant there was much less room for lender discretion and more applications could be declined.
Consumer NZ revealed last year banks reported 100,067 customer complaints to the Banking Ombudsman and nearly one in five Kiwis had a problem with their bank in the year to June.
Poor customer service was the most common complaint.
Harry van der Merwe, from Hello Mortgage and Insurance Advisers in Rotorua, said one bank took 31 days before they came back to him on a top-up on a mortgage for his client.
Another did not pick up a home loan application for 27 days.
"It is just ridiculous...and is a real frustration for us."
Assessment rates and income calculations had also changed and van der Merwe said some of his clients who had pre-approval now would not meet the new criteria.
"So we are telling them [clients] to find a house as fast as you can before your pre-approval runs out."
For example, van der Merwe said the uncommitted net monthly income amount in some instances had jumped from $700 to $1100.
A bank lender told him he was declining 65 to 70 per cent of applications.
"It's huge. A lot of people who were previously approved just don't fit the mould any more."
First-home buyers would struggle, van der Merwe said.
"I would hate to be a first-home buyer in this market; it's going to be really hard for them."
Rapson Loans and Finance owner Chris Rapson said, in his experience, some banks had struggled with processing loans and don't have enough experienced staff.
"They are very difficult for us to deal with... it's probably worse now than it's ever been. I don't think they care that much, the days when the customer came first are long gone.
"I think they've placed greater value on shareholder wealth than they do on fulfilling their underlying brief, which is to provide banking services."
Some banks had reported heavy profits despite Covid and the lockdowns, he said.
Rapson said in his opinion: "So they're not unhappy about things. They're actually quite relaxed because they make more money with the doors shut than the doors open. ''
Rapson said some banks had told him once a loan application was made it could be 15 working days "before you hear from us".
Ownit Rotorua manager and registered financial adviser Hayley Hubbard said there was no consistency from some banks - "it's actually all over the place".
"I think it really depends on the deal and who is picking it up."
She acknowledged it had been a hard slog for the banks to implement all the CCCFA changes.
Consumer NZ chief executive Jon Duffy said ultimately banks were accountable to their customers.
"If service is poor, customers vote with their feet and switch to alternative providers."
He acknowledged banks were closing branches around the country and there would be fewer face-to-face interactions.
"We believe banks can provide satisfactory customer service to their customers remotely, but they need to ensure their services are accessible and fit for purpose for all customers."
A spokesperson from one bank said it encouraged customers to contact them directly if they had an experience that wasn't up to their expectations.
Detailed data around home lending and staffing was commercially sensitive "but we can say that our home loan team numbers have increased".
Another bank spokesman said it had improved its time to respond to customers over the past few weeks and was now taking an average of three to five days to process a lending application.
"We continue to focus on balancing customers' interest in receiving a quick response with the need to work through their application in detail so that we understand their financial position accurately," a spokesperson said.
Another bank said under the CCCFA changes customers might need to provide more information.
"This includes evidence of income, debt, and expenses. While the changes are designed to protect customers from taking on unaffordable debt, it does also mean that applications to borrow money may take longer to process," a spokesperson said.
New Zealand Bankers' Association chief executive Roger Beaumont said banks were responsible lenders and took their obligations under the law very seriously.
"The new [CCCFA] rules are fairly tight and there's much less flexibility or room for lender discretion than was previously the case.
"For example, you might need to provide evidence of recent transactions so your bank can get a clear idea of your debts and expenses. This means it will take longer to get a loan, and more applications may be declined because the deeper dive into your finances might show you're less able to repay the loan."
According to the Banking Ombudsman's annual 2020/2021 report, it received 4813 complaints - a 5 per cent increase on the previous report.
Declined home loan applications and changes to branch services were among some of the top complaints.
To increase transparency in August 2020 the Ombudsman Scheme was launched and banks were required to record and forward every complaint.
More than 100,000 complaints were made to banks in the 2020-2021 financial
"Previously, our own data was the sole source of information about complaints, but we knew this data was only the tip of the iceberg," the report said.