Consumer debt repayments at strongest level in four years

The number of Kiwis defaulting on their debt repayments is on the decline.

The latest data from Centrix shows there has been a 12.5% drop in the 12 months to May. That means there are still around 432,000 consumers in arrears, which accounts for about 10 percent of the credit-active population.

But it is still a vast improvement on recent years. In fact it is the lowest it has been in four years and indicates a drop in repayment pressure on some households.

But there is one sector of the community who appear to be struggling more than others. Renters.

Non-homeowners account for 74,000 of the 89,000 consumers who are late on their payments by 90 days or more. In contrast, just 1.27 percent of mortgage holders are in arrears, the lowest level recorded since September 2023.

It’s a similarly positive picture when it comes to business..

Despite a recent increase in liquidations, the Centrix data shows a 13% drop in credit defaults year-on-year. The strongest performing sector was agriculture, which was down a whopping 31 percent, followed by manufacturing and construction. 

But Centrix Chief Operating Officer Monika Lacey says it’s not all plain sailing.

“Hospitality remains one of the most vulnerable sectors, with restaurants, cafés, pubs and takeaway businesses continuing to face significant pressure “.

As for new lending, Centrix found demand for credit from both businesses and consumers has eased somewhat, down 2.4% and 5.3% respectively.

“That possibly reflects wider uncertainty about the economy given the recent turmoil in the Middle East” says Lacey.

“Overall, the results show a general improvement in where people are at, but could hint at a possible slowdown in activity down the track”.

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