Figure climbs to 15,000 in June, Centrix confirms
The number of consumers behind on their loan repayments has exceeded 2019 levels for the first time, a latest report from Centrix shows.
According to the Centrix June Credit Indicator report, consumer arrears are up 4% year on year, with 426,000 Kiwis behind on their loan repayments – up 15,000 month on month.
Centrix noted that 11.7% of the active credit population were behind on repayments, with double-digit arrears for unsecured personal loans (10%) and buy now pay later accounts (10.4%).
Mortgage delinquencies have increased by 1.32%, with 19,500 households behind in their mortgages, up 34% year on year. This was the highest level reported since the start of the COVID-19 pandemic in March 2020, the credit agency said.
The June data represents a U-turn from Centrix May figures, which showed that the number of mortgages in arrears retreated to 19,000.
Centrix managing director Keith McLaughlin (pictured above) told NZ Adviser that arrears typically rose over the Christmas period and started to fall around the middle of the year.
“The trend has reversed – they’re going up – which is a concern,” McLaughlin said.
McLaughlin said that the effects of rising interest rates, and uncertainty around the cost of living were still a concern for borrowers.
In line with market commentary that interest rates are nearing the peak, McLaughlin said that by the end of the third quarter, he expected borrowers to have greater confidence that interest rates would stabilise.
“The cost of living is still a concern out there … until late September early October, I can’t see [arrears] going down,” he said.
McLaughlin said that later this year, he expected borrowers to be more conscious about where the cost of living would land, allowing them to plan accordingly.
“Discretionary spending may start to increase, therefore consumer confidence may start to come back … I think part of the problem is the uncertainty,” he said.
There were generally two types of households: recent property buyers with higher borrowing who would continue to feel the pressure, and those who had owned property for some time and had paid off (or paid down) their mortgages and are not affected to the same extent, McLaughlin said.
New mortgage lending down 27%
Centrix June figures showed new mortgage lending was down 27% year on year, reflecting the housing market downturn.
Demand for mortgages activity remained quiet, Centrix said, with application enquiries down 3.4% year on year.
Non-mortgage lending was up 10% year on year, which Centrix said was driven by strong growth in vehicle loan finance.
In addition to consumer lending and mortgages, credit defaults climbed in the business sector, with overall company liquidations up 35% year on year.
Centrix said that a climb in credit defaults was seen across several business sectors, including the property/rental industry, hospitality, retail trade and construction.
Vehicle loan arrears rose to 5.7%, up 31% year on year, its June data showed. Credit card arrears fell to 4.5%, slightly higher than the same time last year.
Aside from mortgages and personal loans, demand was up for almost all credit products, Centrix said. The credit agency noted that that demand for new vehicle loans remained buoyant, with enquiries up 17% year on year.
As a mortgage adviser, are you seeing an increase in mortgage stress amongst your clients? Share your thoughts in the comments section below.
