Latest Reserve Bank figures show the total of officially 'impaired' housing loans has now surpassed the peak of the sharp, but brief rise during the pandemic in 2020

The amount of money owed on non-performing housing loans has risen by 47.5% in the first six months of the year.

This is according to new bank loans by asset quality figures released by the Reserve Bank.

The figures show that in the month of June 2023,  non-performing housing loans rose by $18 million to $1.254 billion. That is a much slower monthly rise than was seen in May 2023, when the figure had actually increased by some $131 million, or 12%. So, we will need to keep an eye on these figures and see if there is now a levelling off in stressed mortgages.

However, even though the latest month's figures have shown a much smaller increase, it still means the total of non-performing loans has increased by the aforementioned 47.5% in the first half of the year, up from $850 million to the $1.254 billion we now see. 

These figures are coming off a very low base, with the total amount of non-performing loans now making up a little more than 0.36% of the $344.508 billion of outstanding registered bank mortgages. 

Nevertheless the percentage of non-performing loans to the total is now running at the highest level for around eight years. But it is little when compared with the 1.2% figure seen in the aftermath of the Global Financial Crisis.

However, back to the present, and in terms of mortgage loans that have been officially tagged as 'impaired' (these are included within the total of non-performing loans), this figure has risen quite sharply in June 2023, by $17 million (11.5%) to $165 million. The total of impaired loans is now higher than during the sharp, but brief, spike that was seen during 2020 at the onset of the pandemic.

In the first six months of this year the impaired mortgage loan total has risen by some $70 million, or 73.7%.

As said above it will be of more than passing interest to see if the overall non-performing figures do level off from here. Certainly the Reserve Bank had been expecting the figures to rise, but it's probably a bit of wait and see for them as much as anybody as to whether things get much worse from here. 

Remember, not everybody has refixed their mortgage interest rates yet to the new higher levels prevailing. And some people will still have monthly payment increases of potentially 50%+ to face.

One other item of interest that I've noted among the June data released by the RBNZ at the end of July is that there's been something of a upturn in the amount of money being taken out for personal term loans by registered bank customers.

Prior to the onset of the pandemic in early 2020 there was consistently over $4 billion worth of personal term loans outstand, but this figure then shrank rapidly, bottoming out at just a little over $2.7 billion in the middle of last year.

Since then though it has risen by about 8.5%, with $31 million added in June to a total of $2.945 billion.

Personal loans on credit cards have shrunk by a similar amount, having dropped from $4.299 billion in December 2022 to $4.103 billion in June 2023.

We'll be keeping an eye on this particular trend as well.

Clearly money seems to be getting tighter for some people than it was, but there appears no particular cause for alarm in the current trends that we are seeing - given that we have come from a period of super low interest rates and a time in which (the pandemic) demonstrably a lot of people were able to put cash to one side.

The interest rate levels we've now got could be with us for quite some time, however, so this could be quite early days yet. Watch this space.