Credit bureau Centrix says 23,700 home loans are past due, a 6% year-on-year increase

Credit bureau Centrix says mortgage arrears have hit an eight-year high. 

In Centrix's  latest monthly credit indicator report,  managing director Keith McLaughlin says 23,700 home loans are past due, a 6% year-on-year increase.

The Centrix figures are consistent with the latest non-performing loans figures from the Reserve Bank, which showed a $165 million spike in the value of non-performing housing loans in January.

McLaughlin noted that the Reserve Bank (RBNZ) cut the Official Cash Rate (OCR) again in February by 50 basis points to 3.75%, "which has led to several major banks reducing their interest rates as inflation eases".

"While many predict further cuts to the OCR later". While many predict further cuts to the OCR later this year, the economic climate remains challenging for many households and businesses across New Zealand," he said.

"It will be interesting to see how changes to interest rates across the banks impact these [mortgage arrears] figures as the year progresses. Looking at seasonally adjusted mortgage delinquencies, there are signs of early arrears stabilising, but 90+ days arrears are still climbing."

McLaughlin said financial hardships have reached the highest level since June 2020, with 14,700 accounts reported in hardship, a 20% year-on-year increase. Among these, 46% relate to mortgage payments, 30% to credit card debt, and 16% to personal loans.

Looking at consumer arrears, McLaughlin notes a seasonal climb and says these arrears usually peak after the festive and summer season.

"Despite this, arrears are tracking 3% lower year-on-year, marking the first year-on-year improvement since December 2021."

However, in terms of business credit trends, McLaughlin said company defaults rose across all sectors, particularly in construction and transport, with liquidations up by 38% over the past year.

"The North Island saw a 35% increase in liquidations, while the South Island experienced a 67% rise.

"In the professional sector, 204 companies were placed into liquidation, a 45% year-on-year increase, highlighting challenges due to reduced demand for services."

"It’s important for business owners to make sure their financial house is in order, especially as economy remains uncertain for the remainder of the year," he said.