Official Cash Rate cuts: Mortgage arrears at two-year low after OCR cuts

Mortgage arrears fell to the lowest level since November 2023, according to Centrix data. Photo / NZME

The number of Kiwis behind on their mortgage repayments fell to a near two-year low in October as Official Cash Rate cuts help underpin a recovery in arrears trends, according to new data from Centrix.

Centrix’s latest Credit Indicator report shows mortgage arrears dropped to 20,900 – or 1.35% of the active population – the lowest level since November 2023 (1.33%).

Mortgage arrears in October were 5% lower year on year.

The improvement is in stark contrast with earlier this year when arrears levels hit an eight-year high in March with 24,000 home loans (1.58%) reported past due.

But Reserve Bank (RBNZ) data shows while non-performing housing loans have been steadily declining since July, they remain more than $800 million higher than two years ago.

More than $2.2 billion in housing loans was classed as non-performing in October 2025, compared to $1.4b in October 2023, according to the RBNZ.

Centrix data shows consumer arrears dropped to their lowest level since October 2023.

The number of people behind on repayments in October fell to 459,000 – or 11.83% of the credit active population – compared to 465,000 in the previous month.

Consumer arrears levels are now 2.5% lower year on year.

Centrix chief operating officer Monika Lacey said there were some encouraging signs of resilience and recovery across New Zealand’s credit landscape.

“Recent reductions in the Official Cash Rate (OCR) have begun to positively reshape the credit environment and last week’s cut is expected to reinforce this trend.”

Last week the RBNZ cut the OCR by 25 basis points (bps) to 2.25%, the lowest it’s been since May 2022.

The OCR has now fallen 325bps since August last year.

Cuts to the OCR are also helping drive significant growth in new household lending, which rose 13.2% year on year in October, according to Centrix.

“Mortgage refinancing now accounts for more than 30% of new mortgage lending, up from 22% three years ago,” Lacey said.

“This shows borrowers’ growing appetite to secure lower rates as competitive pricing intensifies across the market.”

‘Persistent pressure for businesses’

Centrix data shows October was the highest monthly total for company liquidations since 2011, with 327.

Construction remains the most affected industry, with 753 firms liquidated in the 12 months to October, an increase of 21% compared to the previous year.

Hospitality liquidations rose 45% year on year to 318.

“This is a sign of both the persistent financial pressure many businesses are under, as well as increased auditing and enforcement by Inland Revenue,” Lacey said.

Figures from the Insolvency and Trustee Service (ITS), which acts as the court’s default liquidator when no other firms take on an appointment, show October was the highest month recorded for ITS-administered liquidations (105).

In the June 2025 financial year, there were 586 ITS-administered liquidations, up from 381 the previous year.

Already there have been 237 ITS-administered liquidations in the first four months of the current financial year.

Cameron Smith is an Auckland-based business reporter. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.