Kiwis prioritise three main things in winter months, credit check boss says

Keith McLaughlin, managing director of credit bureau Centrix, says house and car loans are usually the last credit payments people let slip. Photo / Supplied

The number of credit accounts in arrears was up 14 per cent in July compared to July last year but down slightly from May with vehicle arrears beginning to creep up, the latest data from credit reporting company Centrix showed.

"Products like mortgages and vehicle loans – secured lending products – are usually the last credit payments people let slip, which indicates we could be starting to see signs of financial stress," said Centrix managing director Keith McLaughlin.

"However, it's encouraging to see home loans in arrears are steadily decreasing and utility arrears are at a historically low level as Kiwis prioritise their housing, electricity and other essentials during the cold winter months."

New lending for mortgages has now recovered to pre-pandemic levels but remains subdued compared to 2021.

That isn't surprising, given the sharp 38.1 per cent fall in residential property sales volumes in June compared with June last year and the 9.5 per cent fall in house prices from last November's peak.

Business impact

Centrix said the business sector is feeling the impact of inflation and is cautious about discretionary spending, while the retail sector is suffering both rising defaults and lower activity, as well as staff shortages and supply chain issues.

Credit demand from businesses was down 12 per cent on July last year.

But, with borders reopened, the tourism sector is experiencing strong activity.

"Looking specifically at credit users under 30 years old, it's interesting to see more than 620,000 active credit accounts in this age bracket with 46 per cent of them opening a BNPL [buy now, pay later] account as their first instance of using credit."

Nevertheless, BNPL new customer inquiries were down 30 per cent on July last year.

Overall, demand for new credit products was down 6 per cent in July with mortgage applications down 29 per cent on July last year. New mortgage lending was down 18 per cent.