Credit data shows consumers hit by Omicron-generated disruptions, nervousness, rising prices and interest rates

Omicron-generated disruptions and nervousness along with rising prices and interest rates are taking a bigger toll on consumers, but there signs of an improvement for business.

The latest data from credit reporting firm Centrix shows consumer credit demand fell 6 percent in the year ended April, and mortgage applications were down 12 percent.

The firm's monthly credit report showed the number of consumers missing payments for unsecured credit such as Buy Now Pay Later and telecommunications contracts was close to a two-year high, while creditworthiness also eased.

"Arrears are also increasing across the board, as Kiwis begin to struggle with making repayments in the face of the rising cost of living," Centrix managing director Keith McLaughlin said.

He said mortgage demand had fallen 12 percent over the past year and the value of mortgage lending was down nearly a third, as the housing market slowed, mortgage rates increased, and getting credit became more difficult.

"Borrowers are being pushed into longer term mortgages to keep payments as low as they can, with 57 percent of new mortgages in 2022 issued with 30-year loan terms."

McLaughlin said mortgage arrears remained low but have been rising, which he saw as "an early signal of increasing financial hardship and a potential sign of future trouble".

However, he said there were some signs of a turnaround in business credit demand, with fewer credit defaults and improved creditworthiness.

"[This] could indicate signs of recovery across the country, or businesses managing their cashflows and making some tough calls before getting into financial distress," he said adding that the retail and hospitality sectors were showing signs of recovery.

McLaughlin said he expected tougher financial times and demand for credit to remain through the year.