Twelve percent of New Zealand borrowers behind on debt repayments, data shows

  • 02/05/2023

New Zealand is feeling the credit crunch with more Kiwis falling behind on their debt payments, new data shows.

The data from credit bureau Centrix, released on Tuesday morning, showed about 12 percent of people who have accessed credit are behind on their payments.

Buy-now-pay-later schemes and unsecured personal loans are causing the most trouble for consumers, the data showed.

Centrix chief executive Keith McLaughlin said the economic circumstances are hampering Kiwis' efforts to pay down debt. He said the cost of living and rising interest rates were causing the biggest problems. 

"I think that's having an impact on households that was unexpected," he told AM on Tuesday. 

The data was "concerning", McLaughlin said.

"I think if you go back to about 2019, there's been a downward trend in arrears with the introduction of responsible lending, better credit information available, and arrears were declining up until about the last 8 to 12 months - then we saw a reversal in that."

Home loan arrears were up 26 percent from March last year - the eighth consecutive annual increase.

"There's going to be some ongoing pressure for some time as interest rates stay at the level they are at the moment," said McLaughlin. "I think households need to adjust to what is going to be the new normal - which is higher interest rates and higher cost of living - and that'll take a few months to work through the system."

By later this year, New Zealanders will be better adjusted to the economic climate, McLaughlin expected.

"Things will start to go back to normal," he said.

"Kiwis are pretty resilient. I think, at the moment, it's the uncertainty of where interest rates are going to eventually land, and the surprise increase in the outgoings of their household budget."   

Centrix April credit indicator breakdown 

  • Loan repayment arrears - 11.8 pct
  • Mortgage repayment arrears - 1.3 pct
  • New mortgage queries - down 15 pct year-on-year
  • Average business credit score - 759.