Nearly 100,000 Kiwis are more than 90 days behind on paying their debts, although consumer arrears overall improved in March, according to new data from Centrix.
Its latest Credit Indicator report shows consumer arrears fell to 11.72% of the credit active population in March, down from 12.09% in February and 7.1% lower than a year ago, Centrix chief operating officer Monika Lacey said.
Consumer arrears in March were at their lowest level since September 2023, she said.
“The number of people behind on payments declined to 459,000, down 14,000 from the prior month. This suggests many households are in a more resilient position than they were a year ago.
“However, 95,000 consumers remain 90-plus days in arrears, showing more serious financial stress is still affecting a small group of borrowers.”
Hardest hit for consumer arrears in the credit-active population were those in Kawerau, Wairoa and Ōpōtiki districts, at about 17%.
Nationally, 22,500 mortgage accounts had been reported as “past due”, but mortgage arrears overall were down from 1.42% in February to 1.39% in March, the report shows.
Vehicle loan arrears were steady at 5.6% and credit card arrears rose slightly to 4.2% in March, although they were still 10% lower than a year ago.
Personal loan arrears improved to 10% in March but remained up and broadly unchanged year-on-year.
“This continues to show that financial pressure is more pronounced for some borrowers in unsecured lending.
“Buy Now Pay Later arrears also improved in March to 8.8%, ending the run of monthly increases seen earlier in the year.”
Meanwhile, last month’s credit data was coming through at a more unsettled point in New Zealand’s economic recovery, Lacey said.
“The Reserve Bank left the Official Cash Rate unchanged [last month] at 2.25% but noted that recent events in the Middle East had materially altered the outlook for inflation and growth.
“Higher oil and refined fuel prices are expected to add to transport and other costs at a point when the recovery is still finding its feet, and there is a broad expectation by economists and business leaders we’re yet to see the full impact filter through.”
That “softer tone” was beginning to show in borrowing behaviour, she said.
Consumer credit demand remained above last year’s level, but inquiries have eased in recent weeks.
“Activity is still holding up in home loans, auto lending and personal loans, while demand across other consumer credit categories remains more subdued.”
There are some encouraging signs, with new lending figures remaining above last year’s level across mortgage and non-mortgage products, and repayment performance continued to improve, Lacey said.
Mortgage arrears in March also fell for households who managed to secure lower repayments by taking advantage of reduced interest rates, she said.
“Though, the picture is not uniformly positive.”
As well as the 95,000 consumers more than 90 days behind on payments, personal loan arrears were still up, and personal loan hardship cases remained above year-ago levels.
Buy Now Pay Later arrears improved in March and the product continued to play a significant role in how many consumers first enter the credit system.
The business picture remained “mixed”, Lacey said.
Credit demand was softer overall, in line with weakness across the services economy.
“Agriculture continues to perform well, but hospitality remains vulnerable. Pressure is also becoming more visible across parts of the ‘other services’ sector, particularly automotive repair and maintenance.”
Liquidations also remained up, with Inland Revenue activity continuing to influence the “insolvency pipeline”, she said.
“Overall, April’s figures suggest credit conditions are continuing to improve, particularly for households, but the whole picture remains uneven.
“Softer confidence, higher external cost risks, and persistent pressure across parts of the market mean careful financial management will remain important in the months ahead.”