Recent growth in new vehicle loan financing and credit card lending have driven non-mortgage lending numbers up 2% from last year.
That’s according to a Centrix Indicator Report for August 2023, the rider being the figures remain low on pre-COVID-19 pandemic levels, down 2% on July 2019.
“Looking towards the business sector, both credit defaults and company liquidations were up across the board year-on-year as the realities of the current climate continue to impact Kiwi businesses,” the report adds.
Vehicle loan arrears increased to 6% of active accounts – a three year high – while credit card arrears edged up slightly to 4.3% but still remain low when compared to historical levels, says Centrix managing director Keith McLaughlin in the report, adding that personal loan arrears are up 17% compared to July last year.
McLaughlin says that perhaps it’s a sign of settling into a new financial situation for New Zealand “as we can properly assess how things will shape up following huge amounts of stress on both consumers and business owners”.
The remainder of 2023 will continue to be challenging for Kiwi households and businesses alike, he predicts.
“We implore those going through financial stress to seek advice and speak with their credit providers early to come up with a proactive plan sooner than later,” says McLaughlin.
“If you’re considering opening a new line of credit, or are concerned about the current climate, make a habit of checking credit scores and make informed decisions to reduce the chances of accruing bad debt during this time.”
The report says the Reserve Bank held the official cash rate at 5.5% in mid-August (it’s widely tipped to do the same on October 4), “allowing for a collective sigh of relief at the possibility of momentary stability for interest rates”.
However, the report notes the cost-of-living crisis continues to linger.
Consumer arrears climbed back to pre-pandemic levels, it says, adding August’s rise in consumer arrears to 11.7% of the credit active population “took us back to 2018 levels”.
“The number of people behind on payments rose to 426,000, compared to 414,000 only a month ago,” the report says, pointing out that after coming off some historic lows, the current arrears levels are 7.5% higher year-on-year.
“The number of credit active consumers in over 90 days arrears rose from 2.6% to 2.7% June to July.”
