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CCCFA is a watch-out for developers


The Credit Contracts and Consumer Finance Act (CCCFA) came into force on December 1 last year which has in turn created more oversight on the income and expenditure of those looking to take out consumer and mortgage loans.  

While CCCFA isn’t applicable to Southern Cross Partners lending, it does tell a cautionary tale for our property construction loans. 

What are the changes? 

The biggest shift we’re seeing is spending that was once discretionary become non-discretionary, such as money spent on streaming service subscriptions, coffee, takeaways, or gym memberships. Recently, the CCCFA has been impacting first home buyer mortgage applications, who are being declined loans due to spending habits.  

A fifth of mortgage approvals have been hit by the new regulations, meaning customers that were previously approved are no longer approved. As a result, there’s been a lending slowdown of 23% from 30,000 home loans down to 23,000 on average per month. 

What does this mean for developers? 

With first home buyers being largely impacted by the CCCFA adjustments, it’s important that property developers consider how this may impact their sales strategy. 

This means it’s also important to reconfirm your clients exit strategy. Many of our loan exit strategies involve property sales. But this may not be as easy with fewer loans being approved, and some pre-approvals being revoked.  

It’s vital your clients have a sound exit strategy, and it’s also important to reconfirm the exit strategies of those who already have loans just in case.  

Feel free to touch base with us if you want to discuss options for your clients. We’re always happy to chat on what can work best when putting together loan deals.