Homeowner stress


Fresh data reveals that the count of Kiwis grappling with mortgage arrears has surged to its pre-pandemic peak, marking a concerning trend.

According to Centrix’s latest credit indicator report, the tally of homeowners falling behind on mortgage payments climbed to 1.47% in January, escalating from 1.40% in December 2023. This translates to more than 21,800 mortgage accounts overdue, marking a 16% increase year-on-year.

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January witnessed a 4% surge in mortgage inquiries compared to the previous year, hinting at a potential uptick in the housing market, as indicated by Centrix.

In a broader perspective, the arrears among Kiwis have hit a “seven-year high,” surging to 9.6% year-on-year, attributed partly to seasonal factors post the festive season and summer holidays. Centrix noted that 480,000 consumers nationwide are lagging on payments, yet emphasized that the majority of reported arrears have missed only one payment and are likely to rectify on their own.

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Furthermore, vehicle loan arrears reached 6.0% in January, witnessing a 5.0% increase year-on-year, alongside a 6.0% uptick in credit demand during the same period.

Keith McLaughlin, the Managing Director of Centrix, pointed out that the financial strain predominantly affects younger demographics, particularly those under 25, owing to lower incomes, limited savings, and less financial acumen. He highlighted a noticeable shift towards financial pressure on individuals aged 30 to 40, who, though relatively more financially stable, might have tapped into their financial reserves.

The escalation of arrears coincides with a surge in business defaults, up by 28% compared to January 2023, with company liquidations witnessing a 16% rise over the same period. Sectors such as retail, construction, hospitality, and transport bore the brunt of liquidations.

McLaughlin also underscored a concerning trend of mortgage stress among sole proprietors, many of whom resort to leveraging home equity to sustain their businesses, potentially posing long-term risks.

“It’s evident that the rising cost of living is exerting pressure on households and businesses nationwide,” McLaughlin remarked.

In light of these developments, McLaughlin urged individuals struggling with debt to engage with creditors to explore alternative repayment options. For businesses, he emphasized the importance of conducting credit checks on new customers before committing to ensure timely payments.