New Zealand banks reject home loans over spending on Christmas gifts and pets as tighter rules hit

Mortgage approvals have dropped from 30,000 a month to 23,000 as lenders apply stricter rules introduced in December

Banks in New Zealand are rejecting home-loans over minor frivolous spending, including a $187 Kmart Christmas shop and a daily drink bought at a corner store, and money spent on pets or petrol, pushing the government to investigate whether banks are overreacting to new finance rules designed to protect vulnerable borrowers from predatory lenders.

The Credit Contracts and Consumer Finance Act (CCCFA), updated in early December, requires all lenders to complete thorough checks to ensure loans are suitable and affordable for their customers.