1 May 2024

Number of debt arrears in NZ creeps back up

6:15 am on 1 May 2024

Mortgage arrears have eased slightly, with 1.48 percent of borrowers behind on repayments. File photo. Photo: 123RF

The number of people behind on their debt repayments crept back up in March, as borrowers continue to feel the pressure of high interest rates and living costs.

The latest data from credit bureau Centrix shows overall consumer arrears rose slightly in March from a month earlier, with 463,000 people behind on their repayments. This translated to 12.7 percent of active borrowers, up from 12.45 percent in February.

When compared to a year ago, arrears were up 7.4 percent, but lower than the figure reported in January 2024, when 480,000 were behind on repayments.

Mortgage arrears eased slightly in March, with 1.48 percent of borrowers behind on repayments, down from 1.51 percent in February.

But home loan arrears were still up 13 percent from a year ago and remained at 2019 levels.

Centrix said there were also 12,900 credit accounts in financial hardship, up 22 percent from a year ago.

Just under half of hardships related to those struggling to repay mortgages, with people aged between 35 and 39 years finding it the hardest.

Centrix managing director Keith McLaughlin said the plateauing of mortgage arrears reflected households being able to manage their budgets better.

"We're not seeing the continual increase in interest rates which does put hardship into households," he said.

The Reserve Bank has not raised the official cash rate in a year, with the benchmark rate remaining at 5.5 percent.

"I'd like to think that we're probably now back to perhaps a peak of where we are with home arrears and they will remain constant for a wee while before they start to fall," McLaughlin said.

Centrix said demand for credit rose 3.5 percent year-on-year, and in a potential sign of a rebounding housing market, mortgage lending rose 6 percent from a year ago

However, demand for car loans fell, which McLaughlin said could be due to the introduction of road user charges and removal of clear car discount for electric vehicles.