Even as mortgage rates come down, the amount of non-performing mortgage loans is continuing to rise, now getting close to $2.5 billion.
Latest monthly loans by asset quality figures from the Reserve Bank (RBNZ) show that the amount of mortgage money classified by the banks as non-performing pushed up by another $9 million in June to to $2.457 billion.
Within this figure, the amount specifically designated as 'impaired' increased by $12 million to $546 million.
The overall non-performing housing loans tally has increased $550 million (28.9%) compared with the same time in 2024. (The RBNZ's summary of the loans by asset quality figures is here.)
While mortgage rates have been coming down, unemployment has been going up, which is likely a factor in the continued rise in the non-performing figures.
The unemployment rate rose from 4.0% to 5.1% during 2024 and then stayed at 5.1% in the March quarter. However, new figures out next week for the June quarter are widely predicted to show a rise to 5.3%.
The non-performing housing loans figure currently represents a little under 0.7% of the over $374 billion worth of outstanding bank mortgage loans. That percentage is well down on the 1.2% figures seen in the aftermath of the Global Financial Crisis, but is well above the 0.2% level seen as recently as in late 2022.
The rise in the non-performing loans ratio was forecast by the banks, but equally they have forecast that 0.7% will be the peak, with this ratio expected to start falling in the last quarter of this year.
Meanwhile, the business lending by asset quality figures show that non-performing loans figures for the small-to-medium-sized businesses (SMEs), after spiking sharply through 2023-24, have levelled off.
However, the non-performing loan figures for large businesses (characterised as having annual turnovers in excess of $50 million) have taken off after being at relatively low levels through 2023-24.
Of the $47.491 billion of 'large business' loans, as per June $545 million was non-performing. That's a rise of $143 million (35.5%) in the past month.
Compared with June 2024 the large business loan non-performing figure is up $246 million, or 82.4%.
For some, the hoped-for economic recovery is clearly not happening yet.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.