There are signs that debt stress levels are beginning to creep back up in what could be an early warning of a tough start to 2021.
The percentage of young Kiwis who have missed payments on their debt has risen between June and October, figures from credit bureau Centrix show.
While those on a mortgage deferral are set to face a crunch point in March when the scheme ends at the same time of year when many Kiwis are still trying to get over Christmas and back to school spending.
Keith McLaughlin, Centrix managing director, said across the board debt arrears were still lower than previous years at 5.1 per cent which showed the wage subsidy and mortgage deferral scheme had helped ease consumer debt stress.
But there were clear warning signs emerging.
"Younger people are starting to feel the pressure in their pockets, likely resulting from a higher proportion of this age group being in casual labour, or working in the hospitality, retail, or tourism sectors," McLaughlin said.
For those aged 18 to 24 the percentage in debt arrears had gone from 9.5 per cent to 10.6 per cent and for 25 to 29 year olds it has risen from 7.5 per cent to 8 per cent between June and October.
"While this is a reflection of the overall impact Covid has had on these industries, it should also act as an early warning sign that the full economic impact of Covid-19 is hasn't been felt yet."
McLaughlin said 3 per cent of mortgages were still on the deferral scheme which ends in March next year.
"They will be the ones that are going to face the greatest difficulty - either loss of income or dropping from a double salary down to one."
He said the default rates for those who had been on a deferral and come off were higher than for those who never went onto a deferral.
"If you look at mortgages about 2.8 per cent are more than likely to default than those who weren't on a deferral."
McLaughlin said people were also starting to lag in their bill payments with arrears for telecommunications bills up 10 per cent in the three months to September and rising 6 per cent for late power bills.
"This points towards potential issues for Kiwis in the future, especially homeowners who are currently taking advantage of the mortgage deferral scheme.
"In mid-2020, 7 per cent of all mortgages were on deferral. While this has fallen, 3 per cent of all mortgages are still deferred, and these households could face significant pressure when the deferral scheme ends in March 2021."
McLaughlin said every year January, February and then half of March were the tightest times from a cashflow perspective for families - and it could be even tighter next year.
"I think arrears are going to continue to increase. I think cash will be tighter after Xmas and taxes are due at the end of March."
He said people who were experiencing payment problems should contact their lender to talk through their options.
"Start the discussions now rather than wait until the last minute because then they will go into arrears and it will affect their credit rating - and it will affect them for some time going forward."
He said people had spent up large this Christmas and while mortgage interest rates had fallen credit card rates had not.
"People need to manage their finances very, very carefully and look for ways to reduce outgoing cash."
He said those coming off a mortgage deferral could look to restructure their loan, or refinance other debt through debt consolidation and people should talk to a budget adviser or their lender if they got stuck.