More people are falling behind on personal debt repayments at the same time as demand for retail finance increases.
The latest figures from credit reporting firm Centrix show the number of accounts that were in arrears grew by 8 percent over November, specifically across personal loans, vehicle finance and utilities credit.
Centrix managing director Keith McLaughlin said the rise was due in part to repayments on big ticket items taking a backseat to more immediate pressures.
The growth was seen across all regions except for Auckland, which recorded a 10 percent fall.
"This is likely due to a combination of the region having more disposable cash due to ongoing lockdown restrictions, as well as greater levels of support from credit providers for those who are having difficulty meeting their payment obligations," Centrix managing director Keith McLaughlin.
Meanwhile, mortgage arrears fell to their lowest level since September 2020, down 1 percent to 13,150 and the number of accounts that were in financial hardship declined by 3 percent to 11,920.
"Despite this fall, it should be noted that hardships are still higher than they were at the start of the Delta outbreak in Auckland, up 12 percent," McLaughlin said.
Business defaults fell by 5 percent over November, as more firms benefited from the easing of COVID restrictions, McLaughlin said.
"This is not being felt evenly across the country however, with Auckland and Northland businesses feeling the impact of extended COVID-19 restrictions, recording increases in defaults of 17 percent and 12 percent respectively since 2019."
This was seen most acutely in the rental/property, transportation and financial services sectors.
New business registrations fell a further 11 percent over the month.
However, there were signs that consumer confidence was picking up steam as holiday season looms, with increased demand for retail finance, particularly from the buy-now, pay-later sector.
"While growth in consumer credit demand will be welcomed by the retail sector as we head into the peak shopping season, early indications are that the demand for consumer credit this Black Friday was lower than last year's record high," McLaughlin said.
This could be because Auckland's retail sector was subject to various COVID-19 restrictions which stopped it from operating at full capacity, he said.
However, McLaughlin said he expected credit demand to continue to increase as the country transitions through the traffic light system.
Centrix sources data from registered banks and 61 other contributors to provide payment behaviour data.