More than 400,000 people behind on payments, hospo liquidations up 51%

Things are looking up for many New Zealanders - but some of those who've fallen behind are getting further into trouble, new data shows.

Centrix has released its latest update, which shows that consumer arrears improved again in May, falling to 10.95 percent of the credit-active population, the lowest level in four years.

But 89,000 people are 90 days or more past due on some of their borrowing.

There were 432,000 people behind on payments by any period of time, down 11,000 from the previous month. The arrears rate is now 12.5 percent lower than a year ago.

Of those who were more than 90 days past due, 74,000 were renters.

Centrix said the pressure on them was particularly visible in personal loans, credit cards and buy now pay later debt.

"What we are seeing is a continued trend that credit behaviour in New Zealand is starting to really improve and recover," Centrix chief operating officer Monika Lacey said. "Consumer arrears are down at a four-year low which is really positive but there's still a segment of that population, 89,000 people that are 90 days or more overdue. So that's a more concerning population. Once you get that far into debt, it gets a bit sticky. It's probably a result of a life event that's occurred."

She said it was important those people knew that they should ask for help as soon as they could.

Mortgage arrears fell to 1.27 percent, the lowest since September 2023. There are 20,700 mortgage accounts reported as past due.

Approved new mortgage lending is now lower than a year ago, suggesting fewer people are refinancing with another provider, and property purchasers are taking more time to assess affordability and borrowing costs.

Mortgage inquires are up 12.5 percent year-on-year and demand for loans for vehicles is up 8.8 percent.

Company liquidations remained elevated and are expected to reach their highest level since 2010.

Hospitality was one of the most vulnerable sectors, Lacey said. There have been just over 3000 liquidations recorded in the last year, up 14 percent on a year earlier.

Construction made up the largest portion of those, with 755 firms liquidated during the period, while hospitality recorded 421, up 51 percent, year-on-year.

Retail trade liquidations were also up 35 percent and food retail businesses were a big part of that. Overall, May liquidations were lower than last year but the broader annual level was high, Lacey said.

"Even though liquidations are elevated, liquidations are really a lagging indicator of behaviour that occurred potentially several years ago. The fact that credit defaults are down 13 percent is a really good sign that fewer businesses are moving into arrears.

"It's been indicated that there's a long tail of clean up that's occurring so I think once we're through that then [liquidation numbers] should improve."

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