Number of Kiwis falling behind on credit payments nears half a million – new data

Worrying new data has found the number of Kiwis falling behind on credit payments is nearing half a million as households continue to struggle under tough economic pressures. 

The latest Centrix Credit Indicator found consumer arrears climbed in December to 12.01 percent of the credit active population. This arrears level is 6.1 percent higher year-on-year, tracking closely to 2018 levels after coming off historic lows. 

That equates to 439,000 individuals falling behind on payments, 4000 more than in November. 

"That's really the frightening part. I think when you look across the board, about 12.01 percent of Kiwis are actually behind on their repayments at the moment and that equates to 439,000 people," Centrix managing director Keith McLaughlin told AM. 

"It does send a worrying signal to the market that there are a significant [number] of households in New Zealand that are struggling to maintain their payments." 

The proportion of home loans reported in arrears also rose in December, with 1.4 percent of accounts now in arrears (up from 1.29 percent in October). 

There are over 20,800 mortgage accounts past due, which is up 21 percent year-on-year, with many loans due to be repriced in the next 3-6 months, the report said. 

"That is really a reflection of what's happened to the interest rates and the cost of living increases over the last 12 to 18 months," McLaughlin said. 

"The sad thing is really, is it's affecting one proportion of the population disproportionately to the other. So, those who took out very high mortgages at very low-interest rates to buy expensive houses… are the ones that have now been caught by the increase in interest rates." 

The report found for the first time since February 2020, telco (telecommunication provider) arrears have risen to double digits as 10.1 percent of accounts were reported in arrears in December. 

Furthermore, the number of households behind on retail energy payments in December 2023 rose to 4.9 percent, compared to 3.5 percent in December 2022. 

Personal loan and BNPL arrears also rose in December (9.3 percent and 8.4 percent respectively). 

Alongside climbing arrears, overall lending was down. The report found new mortgage lending in December 2023 was down 8 percent, while non-mortgage new lending (credit cards, vehicle/personal loans, BNPL and overdrafts) was down 12 percent year-on-year.