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Improvement in arrears but trough still to come

Although the country is in a technical recession, credit data trends show a mixed bag.

Thursday, April 4th 2024, 10:38AM

by Sally Lindsay

The number of mortgages reported in arrears increased to 1.51% in February, with 22,600 mortgage holders behind on their payments, the highest level since January 2020, data from credit reporting bureau Centrix shows.

Alongside rising mortgage arrears, non-performing home loans at 90+ days past due have risen sharply over the last three months.

Year-on-year the number of non-performing home loans is up by 44%, while early arrears are holding steady over the past year.

Meanwhile mortgage arrears are on the rise for loans opened during the period when the OCR rate hikes occurred (since October 2021). Thirty-plus-days arrears at 24 months on the books have risen from 0.2% to 0.5% in the past two years.

Mortgage applications are 6% lower compared to the same period last year, as sales volumes remain low, but new mortgage lending was up 5% in February compared to the same month last year, although sales volumes continue to be relatively low as buyers remain cautious.

Other lending down

On the other hand, non-mortgage lending is down 4% year-on-year due to lower volumes of new vehicle loans compared to last year. Overall new household lending is 3% higher on a year-on-year basis.

The bureau says the picture emerging is uncertainty for this year overall.

Centrix managing director Keith McLaughlin says there are reasons to be cautiously optimistic. Overall credit arrears are showing signs of improvement, with the number of people behind on their payments down 23,000 month-on-month and falling back to 457,000.

Although this improvement was expected following the seasonal uptick of late payers in January, demand for credit was also up 3% compared to the same period last year, buoyed by higher volumes of applications for unsecured credit.

However, the bigger year-on-year picture, shows arrears are 8.1% higher, tracking closely to 2018 levels after coming off historic lows, he says.

“We continue to see arrears rise for mortgages, personal loans and buy now pay later (BNPL) products as debt and financial stress builds.”

Interestingly, vehicle loan applications are 16% down year-on-year, as new car sales continue to show a decline.

Hard hit sectors

Whilst business credit demand is up 7% and has risen more than 10% for the hospitality, retail and transport sectors over the past year, the hospitality sector will undoubtedly continue to face challenging months ahead.

Defaults for the property/rental sector were up 100% year-on-year, followed by retail trade (up 41%), transportation (up 34%) and construction (up 23%).

Pubs, bars, restaurants and cafés are at most risk as weak customer demand, rising costs and ongoing staff shortages pinch.

There are almost 30,00 registered hospitality companies in New Zealand, making up 4% of all registered companies.

At the moment, hospitality businesses are more than two times likely to fail than the typical business.

In February, 17 hospitality companies filed for liquidation compared to 12 liquidations the month before.

Tags: Centrix

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
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 - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
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 - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
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 6.89 6.55 6.35
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 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 12 June 2024 4:04pm

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