It sounds like a bad joke, but in New Zealand, it is a reality: buying too many takeaway coffees or having too many subscriptions can get your home loan or personal loan declined. This is due to the strict regulations under the Credit Contracts and Consumer Finance Act (CCCFA), which were tightened significantly and remain a major hurdle for borrowers in 2026.
The law was designed to protect vulnerable borrowers from predatory lending. However, the unintended consequence is that major banks now have to scrutinize your bank statements line by line. They are legally required to treat your regular spending habits as “committed expenses,” drastically reducing the amount they think you can afford to repay.
If you have faced a decline from a major bank due to “affordability” despite having a good income, you are likely a victim of these rules. The good news is that not all lenders interpret these rules with the same severity. Non-bank lenders and finance companies often have more flexibility in how they assess your discretionary spending.
In this guide, we explain what the CCCFA actually demands from lenders and how you can “groom” your bank statements to maximize your chances of approval.
What Are Banks Actually Looking For?
Under the strict interpretation of the CCCFA, lenders must prove that a loan is “suitable” and “affordable” for you without causing substantial hardship. This means they can no longer rely solely on your income figure. They must subtract every single expense to find your “Uncommitted Monthly Income” (UMI).
The problem? Many banks now classify discretionary spending (like Netflix, gym memberships, or Uber Eats) as fixed commitments. If your UMI is too low after these deductions, your application is declined, regardless of how much you earn.
The “Red Flags” That Kill Applications
Before you apply for a mortgage or a personal loan, review your last 90 days of bank statements for these common deal-breakers:
- Unarranged Overdrafts & Dishonours: If your account has gone into negative balance without an arrangement, or if a direct debit has bounced, this is an immediate red flag. It screams “poor money management” to a bank.
- Gambling Transactions: Frequent transfers to TAB, Lotto, or online casinos are viewed very negatively. Even small amounts can suggest high-risk behavior.
- Buy Now Pay Later (BNPL): Excessive use of Afterpay, Laybuy, or Zip suggests you rely on debt for everyday living costs.
- Undisclosed Debts: If you have a credit card you “forgot” to mention, the lender will see it on your credit report. Honesty is non-negotiable.
How to “Groom” Your Bank Statements
The golden rule for 2026 is the “3-Month Clean-Up.” Banks typically request your last 3 months of bank statements.
- Stop Discretionary Spending: Cut back on takeaways and subscriptions 90 days before applying.
- Pay Bills on Time: Ensure no automatic payments bounce.
- Close Unused Limits: Reduce credit card limits or close unused BNPL accounts to boost your borrowing power.
If you need funds urgently and cannot wait three months to clean up your statements, you may not fit the strict criteria of a main bank. In this case, comparing Tier 2 finance companies might be your best option, as they often take a more practical view of your living expenses.
Final Thoughts: Don’t Let a Coffee Decline Define You
The CCCFA changes have made borrowing from a major bank in New Zealand significantly harder, turning everyday spending into a potential hurdle. However, remember that these rules are primarily about “affordability” calculation, not your character.
If you have “groomed” your bank statements for 3 months and still face rejection, it might be time to look beyond the big four banks. As discussed in our guide to NZ lenders, Tier 2 finance companies often have more discretion to look at the bigger picture rather than just your Uber Eats history. They can often approve loans that banks decline, provided you can afford the repayments.
Action Plan: Download your last 90 days of transactions, highlight every non-essential expense, and cut them ruthlessly before your next application.
Frequently Asked Questions
How far back do banks check bank statements in NZ?
Most NZ lenders request your last 90 days (3 months) of bank statements. They use this period to calculate your average spending and verify your income stability.
Does Buy Now Pay Later (Afterpay) affect mortgage applications?
Yes. Banks view Buy Now Pay Later (BNPL) services like Afterpay and Laybuy as debts. Regular use can lower your borrowing power because lenders assume you rely on debt for daily living costs.
What if my loan is declined due to affordability?
If a bank declines you due to CCCFA affordability rules, you have two options: either reduce your expenses for 3 months and reapply, or apply with a Tier 2 finance company that may have more flexible criteria.
Can I redact (hide) items on my bank statements?
No. Lenders require unredacted, original bank statements. Hiding transactions is seen as fraudulent or suspicious behavior and will lead to an immediate decline.
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