Centrix managing director Keith McLaughlin says anticipation of a recession is affecting consumers' payment behaviour

Debt arrears are continuing to increase as "Kiwis feel the pinch", according to credit bureau Centrix.

In its latest monthly update, the bureau's managing director Keith McLaughlin says data shows that for some Kiwis, the anticipation of a recession is affecting payment behaviour.

He says many people are choosing to focus on their mortgages – due to interest rate hikes – in order to keep their largest asset well and truly secure.

"On the other hand, vehicle arrears grew for the fifth consecutive month [to 4.8%, the highest reported level since January 2021] and BNPL [buy now pay later] arrears rose to a three-year-high of 9.3% in August – suggesting that pressure is building in some corners of the economy," he said.

"Overall, the number of people behind on repayments fell month-on-month to 10.8% of the credit active population in August 2022.

"However, consumer arrears are up 8% year-on-year as economic downturn persists.

"The proportion of home loans with missed payments is up slightly at 0.98% in July, with more than 14,200 mortgage accounts past due. However, there’s little sign of mortgage stress emerging, despite the ongoing cost-of living crisis and geopolitical uncertainty."

The proportion of credit cards overdue is at record low levels and while seasonal increases in missed energy bill payments saw arrears on utility accounts rise to 4.2% in August, this is still well down on historical levels, McLaughlin said.

Demand for personal loans has resurged as Kiwis look to fund spending, while mortgage demand has fallen in line with the cooler housing market.

"Discretionary spending is also on the chopping block, with new Buy Now Pay Later (BNPL) enquiries down 27% year-on-year in September 2022," McLaughlin said.

He said while officially forecasts don’t point to a recession, it appears there are more challenging months ahead for New Zealanders.

"As always, it’s important for those at risk of missing repayments to talk to their bank or lenders as soon as possible to avoid long term financial stress."