Tougher credit checks ahead as lenders lift safeguards
The Reserve Bank (RBNZ) is putting deposit takers on notice, calling for stronger, more forward-looking risk systems that can withstand a changing economic environment.
For Kiwi mortgage advisers, this matters directly: your lender partners are being pushed to tighten governance, uplift risk capability, and better anticipate emerging threats – all of which can influence credit appetite, pricing, and turnaround times.
RBNZ’s latest thematic review stresses that “effective risk management enables deposit takers to identify and mitigate risks proactively, reducing the likelihood of failures and building resilience in the financial system.”
Risk management, says director of financial system assessment Kerry Watt, in a media release, is “central to our mandate of protecting and promoting financial stability.”
Risk frameworks, governance, and culture under the microscope
The review focused on three pillars: the Risk Management Framework, governance and oversight, and the risk management function. It covered nine deposit takers “of varying sizes and business models,” finding that current practices were largely proportionate to each entity’s size and complexity.
However, RBNZ is clear that “more needs to be done to uplift capability to meet the Reserve Bank’s expectations.”
For lenders and their broker partners, that backdrop likely means continued investment in risk systems, data and oversight – and, over time, a more nuanced view of borrower, portfolio and funding risk.
“Sound risk management requires forward looking and adaptive practices underpinned by strong governance and risk culture. This enables firms to effectively manage known and emerging risks in a changing economic environment,” Watt said.
What it means for lenders – and for your clients
All deposit takers are “expected to consider the findings and recommendations outlined in the report and take appropriate actions.” RBNZ will monitor how firms respond “as part of ongoing supervisory monitoring,” signalling that this is not a one‑off exercise but an ongoing uplift.
For Kiwi mortgage advisers, expect:
- More emphasis on documentation, affordability testing, and verification.
- Closer scrutiny of higher‑risk segments and complex deals.
- Gradual alignment with upcoming guidance “supporting the risk management standard under the Deposit Takers Act 2023.”
The next thematic review will target risk management in the general insurance sector – another area that ultimately feeds into overall household financial resilience and mortgage serviceability.
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