An increased volume of personal loan applications suggests Kiwis are increasingly turning to debt to fund spending, Centrix says.
The credit bureau's October Credit Indicator shows the value of new consumer loans granted during September this year was 18% higher than in September 2021.
"The economic climate remains challenging for many Kiwis as they continue to adjust to the impacts of inflation and the rising cost of living. The Reserve Bank raised the Official Cash Rate for the fifth time in a row to 3.5%, the highest level in over seven years, and interest rates are continuing to climb," Centrix Managing Director Keith McLaughlin says.
"Alongside this, Statistics NZ recently reported the cost of living for the average Kiwi household increased by 7.7% in the September 2022 quarter. This squeeze is being reflected in borrowing, as consumer credit demand has started to climb again to pre-pandemic levels, with personal loans on the rise as Kiwis turn to credit to support their spending."
Centrix says in September 10.6% of active borrowers were behind on repayments, up 2% year-on-year. Some 4% are currently 30+ days past due, and 2.3% are 90 plus days past due. These figures remain unchanged month-on-month.
Mortgage applications and lending are trending down as the housing market continues to weaken. Applications for mortgages were down 11% year-on-year. New mortgage borrowing was down 37%.
However, mortgage arrears have edged above 1.0% for the first time in six months, with 14,600 mortgage accounts past due. Despite this Centrix sees no sign of widespread mortgage stress.
Arrears on vehicle loans have improved to 4.5% this month, down from 4.8% the month prior, after rising for the past five months. Arrears on unsecured personal loans dipped to 7.6% from 7.7%, Centrix says.
Credit card arrears remain at record low levels of 3.9%, which has been achieved three times this year so far in June, August and September.
New credit card applications rose 3% year-on-year, while buy now pay later enquiries fell 25%, Centrix says.
The number of Kiwis with active credit card accounts is down 33% since 2019 and the average credit score is 824. A credit score is a number between one and 1000 indicating how likely you are to pay your bills on time.
There are nearly 2.1 million New Zealanders who have an active credit card, with 650,000 borrowers with multiple credit cards in their wallet. The average credit limit on active cards in New Zealand is $7,600, Centrix says.
The average business credit score for new applications is down to 756. This has been steadily declining during the last six months, down from a high of 779 in April.
"The hospitality and construction sectors in particular are feeling the crunch at the moment. Both sectors have seen an upswing in defaults due to supply chain issues and the overall slowdown in consumer spending. Overall increases in costs are becoming difficult to pass on to customers who are far more aware of their expenses at the moment, making the ongoing impacts of inflation that much harder for Kiwi business owners," says McLaughlin.
Meanwhile, the number of households behind on utility bills has improved, falling to 3.3% of accounts in September down from 3.6%.
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