NZ Consumer Credit Performance Sees Lowest Arrears Since 2021

New Zealand's consumer credit performance has seen significant improvements in June, with arrears falling to their lowest level since 2021. According to Centrix's latest Credit Indicator report, consumer arrears decreased to 10.65%, while mortgage arrears dropped to 1.20% - the lowest since December 2022.

Despite the OCR rising to 2.5% in early July as part of the Reserve Bank's efforts to contain inflation, which now stands at 4.1% annually, the trend is considered positive by Centrix. However, their chief operating officer Monika Lacey cautioned that 'elevated inflation, higher interest rates and winter costs leave the outlook finely balanced.'

Not all borrowers are benefiting equally from this improvement. The report highlights that 84,000 consumers remain 90 or more days behind on payments, with renters making up roughly 70,000 of these cases. Personal loan hardship has also risen sharply, increasing by 37% year-on-year and now accounting for 24% of all hardship cases nationally.