Key Facts

  • The number of New Zealanders failing to keep up with their mortgages rose again in October, as reported by Centrix.
  • In October, 1.29% of home loans were in arrears, an increase from 1.25% in September, equating to 19,200 overdue mortgage accounts.
  • This issue could persist until 2024 due to loans being refinanced at higher interest rates in the current economic climate.
  • Recently, the Reserve Bank stated that rates would need to remain high for a longer period, meaning relief through lower interest rates is not imminent.
  • Demand for both personal and vehicle loans and credit cards has increased.
  • Arrears in consumer credit rose to 11.78% in October, up from 11.70% the previous month.
  • In October, company liquidations increased 36% year-on-year but were down from 40% in September.

Article Summary

The number of New Zealanders lagging on their mortgage payments surged in the month of October, as per Centrix’s latest reports. With 1.29% of home loans overdue, this represents about 19,200 mortgage accounts, marking a 25% increase year-on-year. According to Centrix, if the trend of refinancing loans at increased interest rates persists due to the economic climate, this scenario could continue into 2024.

With the Reserve Bank’s recent announcement that rates need to remain high for a longer duration, homeowners under financial strain are unlikely to find relief soon through lowered interest rates. Additionally, coupled with traditional seasonal trends, retail sales are seeing a rise in consumer credit demand. This has led to an 11.8% year-on-year surge in credit card demand and a consistent rise in personal loan demand.

The report also showed an increase in arrears for personal and vehicle loans, and credit cards, with consumer arrears amounting to 11.78% of the credit active population in October. Corporate liquidations remain high, particularly for retail firms where liquidations rose by a whopping 73% year on year as businesses grapple with reduced spending.

While the festive season can lead to increased spending and credit demand, financial prudence is advised to avoid falling into debt traps that could negatively impact credit scores and future financial decisions. Individuals and businesses are urged to be mindful of their financial commitments to avoid unfavorable outcomes.

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