The National Party has proposed a law change to alleviate the credit crunch afflicting some borrowers, as banks trim back on new lending, apparently on the back of new rules introduced by the Government.
CCCFA regulations, which came into force last December, have seen some prospective borrowers have mortgages turned down for things as simple as Netflix subscriptions and gym memberships.
The regulations were intended to curb predatory lending by loan sharks, but have ended up making banks trim back on lending to some customers, although not everyone agrees on why.
National's fix is a bill from the party's commerce spokesman Andrew Bayly, which would mean regulations issued under the CCCFA could differ depending on the type of financial institution being regulated. Bayly argued it made little sense to have the same set of regulations governing both loan sharks and banks offering mortgages.
He has written to Commerce Minister David Clark with National spokeswoman for housing Nicola Willis urging Clark to take up the bill and pass it, promising National support - although Labour's majority means this is not required.
Willis said the bill would "ensure regulated financial institutions, including the major trading banks, are able to exercise appropriate discretion over their lending decisions, as has historically been the case".
Willis said the regulations had "resulted in banks engaging in intrusive auditing of potential borrowers' spending histories and Kiwis having their loan applications rejected for absurd reasons like buying takeaways too often, subscribing to Netflix or going to therapy".
The Government is not entirely convinced the CCCFA is destroying the prospects of first home buyers.
Clark has said that banks "appear to be managing their lending more conservatively at present, and this is likely due to global economic conditions", but added that conservative lending could also be the fault of the CCCFA requirements.
Reserve Bank lending data shows the number of mortgages to first home buyers in December last year, the first month of the new regulations, down 21 per cent from the year prior.
However, this tracked with an overall downturn in real estate that month - in fact mortgages to first home buyers did not dip quite as much as overall residential dwelling sales, which fell 29 per cent on the previous December, according to REINZ data.
Last month, Clark launched an inquiry to get to the bottom of the problem.
But Willis criticised the review, saying that it would be "conducted by the same Government agencies who created the problematic regulations in the first place".