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Struggles with debt for most Kiwis

Kiwis are now really feeling the pinch amid tight economic conditions and rising interest rates.

Wednesday, November 1st 2023, 9:41AM

by Sally Lindsay

The latest Centrix Indicator report shows financial conditions are continuing to have an impact on credit trends for both consumers and businesses.

While credit demand is now back above pre-pandemic levels, boosted by vehicle loans, retail energy, credit cards and personal loans,  arrears have also climbed, tracking close to 2018 levels – although these levels are coming off historic lows in the wake of the pandemic.

The number of people behind on their repayments has risen month-on-month to 427,000. Interestingly, says Centrix managing director Keith McLaughlin, many of the discretionary spending arrears have gone down month-on-month, while essentials like retail energy arrears have climbed in recent months.

“Mortgage and vehicle loan arrears are also up year-on-year, which is a concerning trend to observe as these essential repayments are often the last households let slip when times get tough.”

Demand for mortgage lending is down 8.8% year-on-year, but a lift in inquiries has been shown since the general election.

Failures

On-line retailing is taking a dive with one-in-four new businesses set up since 2020 falling over, the latest data from Centrix shows.

Across the board, company liquidations are up year-on-year in September as credit defaults continue to rise.

In New Zealand’s business sectors, the challenges run deep through most sectors – especially those in retail and construction, McLaughlin, says.

When it comes to businesses falling over, the highest rate of failure happens within the first five years of existence.

Recent business failure trends found non-store retailing had the highest rate, with almost one in four new businesses since 2020 closing followed by clothing and footwear retailers.

In fact, retail stores specialising in high cost products like motor vehicles, electrical appliances and household furniture are at a greater risk of liquidation than other business sectors, McLaughlin says.

“It’s clear the climate remains tricky to navigate for a lot of Kiwis. As discretionary spending continues to scale back, many retailers are beginning to feel the pinch.

“As we begin turning our sights towards the Christmas and summer period, these concerns are likely to be weighing heavy on many minds across the country.”

He says for anyone who is worried about the credit or financial status, now’s the time to seek advice for mitigating any long-term damage to their credit rating. And for business owners, ensuring extra vigilance around who credit is extended to can help avoid any pitfalls of late payments or bad debts.

Tags: Centrix

« New Zealand households more exposed to mortgage defaultsHousehold financial stress likely to grow: RBNZ »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.45 7.05 6.85
ANZ 8.64 7.99 7.69 7.49
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.39 7.09 6.89
ASB Bank 8.64 7.45 7.05 6.85
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.35 7.05 6.85
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.95 7.65 7.45
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.10 - -
Co-operative Bank - Owner Occ 8.40 7.30 7.05 6.85
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.80 7.55 7.35
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.99 6.85 6.65
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.85 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.59 7.29
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.35 8.05 7.79
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.35 7.05 6.89
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.90 7.75 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% ▲8.84 ▼8.30 ▼7.89 ▲7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% ▲9.84 ▼9.30 ▼8.89 ▲8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 8.05 7.65 7.29
SBS Bank Special - 7.55 7.15 6.79
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 7.05 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.19 7.89 7.65
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.39 7.09 6.85
Unity 8.64 6.99 6.99 -
Wairarapa Building Society 8.60 7.15 6.94 -
Westpac 8.64 7.99 7.59 7.35
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.39 6.99 6.75
Median 8.64 7.45 7.40 6.87

Last updated: 29 November 2023 1:56pm

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