Summary: The govt has launched an early review of how new consumer finance legislation is affecting mortgage lending after credit reference firms reported a 20-35% drop in approvals in December.

Checking loan checks Commerce minister David Clark announced late on Friday that an apparent crackdown on new mortgage lending in December has forced the government to launch an early review of how banks are operating under the new Credit Contract and Consumer Finance Act (CCCFA).

Clark told Stuff he had asked the Council of Financial Regulators, which includes the Reserve Bank, the Treasury, Financial Markets Authority, the Ministry for Business, Innovation and Employment (MBIE) and Commerce Commission, to bring forward a scheduled investigation into “whether banks and lenders are implementing the CCCFA as intended”. 

“Banks appear to be managing their lending more conservatively at present, and this is likely due to global economic conditions. It may also be that in the initial weeks of implementing the new CCCFA requirements there has been a decision to unduly err on the side of caution,” Clark said.

“A number of factors affecting the market have occurred at the same time as the CCCFA changes, including increases to the OCR, LVR changes, and an increase in house prices and local government rates. An investigation by COFR (Council of Financial Regulators) will determine the extent to which lender behaviour, in respect of the CCCFA, is a significant factor in changes to banks’ lending practices,” he said. 

Rejections galore Credit reference firm Equifax has reported a 35% drop in mortgage inquiries, while fellow credit referee Centrix reported on Friday that banks had rejected 20% of mortgage applications in December. That had reduced the overall approval rate from around 35% in November to 30% in December. It had been as high as 39% in October. Centrix estimated this would reduce new mortgage lending by almost $2 billion to $6.4b in December from 8.3b in November.

Pain-free rejection GlaxoSmithKline and Pfizer said on Sunday it had rejected a £50b (NZ$100.5b) takeover bid for their consumer healthcare joint venture from Unilever. The bid of £41.7b in cash and £8.3b in Unilever shares came along with two other unsolicited and unidentified offers, GSK said. The joint venture owns brands such as Panadol, Voltaren and Nicorette.

Cautious approach Prime minister Jacinda Ardern expects cautious advice for Cabinet from the Ministry of Health this week on what to do about the border settings.

Her comments came as a large number of locations of interest up and down the country were posted for an MIQ worker with omicron and close contacts. The PM was hopeful that the case’s transmission could be contained with contacts testing negative so far, but cautioned an outbreak was inevitable. She said the government currently had no plans to toughen restrictions, but noted border restrictions had been very useful in delaying any community transmission.

Tongan eruption The world’s most powerful volcanic eruption in 30 years launched tsunamis that swamped the foreshores of Tongan islands and blanketed them with ash on Saturday night. Power outages took out communications with the islands, although reports via satellite links overnights indicated no deaths or injuries yet, and that rain had washed away the ash. NZ is set to send a reconnaissance flight to the islands from Auckland later today. (RNZ)

14% inflation Netflix US increased its main price by US$1.50/month or 14% to $15.49/month over the weekend. This was its first price hike since Oct. (The Verge)

Double deportation Australia cancelled Novak Djokovic’s visa for a second time late yesterday, forcing the unvaccinated Serbian tennis star to fly out from Melbourne to Dubai last night. Federal Immigration Minister Alex Hawke used his personal discretionary powers to cancel the visa, saying Djokovic’s presence posed a threat to public order from anti-vaccination protestors. (ABC)

Fresh on BusinessDesk this morning

Pattrick Smellie makes his predictions for 2022 in this column. 

Rebecca Stevenson goes inside the revival of CricHQ to talk to Grant Elliott and Playmaker Labs CEO Erin Walshe.

Dan Brunskill reports Sharesies added its 500,000th user last week.