The number of Kiwis with mortgage arrears has risen to its highest level since before the Covid-19 pandemic, new numbers show.
In Centrix's latest credit indicator report, the number of homeowners behind on their mortgage payments climbed to 1.47% in January, up from from 1.40% in December 2023.
"This equates to over 21,800 mortgage accounts past due, up 16% year-on-year," the report said.
In January, mortgage inquiries were up 4% year-on-year, which Centrix suggested could signal a "warming" of the housing market.
Overall, the number of Kiwis with arrears reached a "seven year high" — hitting 9.6% year-on-year "reflecting seasonality following the festive season and summer holiday break".
Centrix said there were 480,000 consumers across New Zealand behind on payments.
"Although important to note that majority of reported arrears have only missed one payment and are likely to self-correct," Centrix managing director Keith McLaughlin said.
Arrears on vehicle loans hit 6.0% in January, up 5.0% year-on-year. Credit demand was also up 6.0% during the same period.
McLaughlin said the financial strain skews towards younger people, with those under 25 more prone to cashflow problems.
"[It was] due to likely lower incomes, limited savings and less financial experience," McLaughlin said.
"We are now starting to see the squeeze flow onto 30-to-40-year-olds, who are likely more financially stable but have perhaps used their buffers."
As arrears continued to climb year-on-year, so too did business defaults, which were up 28% compared to January 2023. Company liquidations were up 16% over the same period.
Retail, construction, hospitality, and transport saw the largest proportion of liquidations.
"We've also observed an upswing in mortgage stress for a sole proprietor, with many needing to leverage their home equity to continue funding their businesses — a concerning trend that could spell trouble for these owners in the long term," McLaughlin said.
He said: "It's clear the cost of living is continuing to impact Kiwi households and businesses across the country."
McLaughlin encouraged anyone struggling with debt to contact creditors to find alternative repayment methods.
"It's also essential for business owners to credit check new customers before creating commitments to ensure they will get paid."
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