Consumer credit demand also weakened despite gains in repayment performance
Consumer arrears in New Zealand have fallen to their lowest level in more than a year, even as company liquidations track towards their highest level since 2010, according to Centrix’s May 2026 Credit Indicator report.
The credit bureau said 11.25% of the credit-active population was in arrears in April, down from 11.72% the previous month. The number of borrowers behind on repayments fell to 443,000, a 9.5% improvement year-on-year. However, Centrix noted that 96,000 borrowers remain 90 or more days past due, with renter households disproportionately affected.
Residential mortgage arrears declined to 1.29% in April from 1.39% a month earlier, representing a 13% year-on-year improvement. Auto loan arrears fell to 5.3%, while credit card arrears dropped to 4.0%, now 9% lower than a year ago.
Despite the improvement in arrears, consumer credit demand softened, falling 1.9% year-on-year in May. Centrix said mortgage enquiries rose 11.3% and auto loan enquiries increased 9.0%, but demand for credit cards fell 15.9%, Buy Now, Pay Later enquiries declined 5.1%, and retail energy enquiries dropped 23.5%.
Overall household lending grew 6.3% in April, driven largely by non-mortgage lending, which rose 14.2% year-on-year on the back of personal and vehicle finance. Mortgage lending remained positive, growing 5.7% year-on-year, but was losing momentum as expectations of higher borrowing costs weighed on buyer confidence, Centrix said.
First-home buyers now account for 25% of new mortgage lending, with average loan sizes rising to $560,000 in early 2026. The report said the typical first-home buyer is aged 37 and generally has a relatively strong credit profile. Separately, the number of borrowers with mortgages exceeding $1 million rose 15% year-on-year to more than 134,000, while more than 18,000 borrowers now hold mortgages above $2 million.
On the business side, credit demand fell 3.6% year-on-year, although defaults improved, declining 14% over the same period. Company liquidations increased 17% overall and are on track to reach their highest level since 2010, Centrix said. Construction recorded the highest number of liquidations, with 780 in the past year, up 7%, while hospitality recorded 414 liquidations, a 49% increase year-on-year.
Financial hardship cases fell 9.3% year-on-year to 13,450 accounts, reversing an upward trend that had persisted since late 2022. However, personal loan hardship rose sharply, up 34% year-on-year, and now accounts for 23% of all hardship cases.
Centrix chief operating officer Monika Lacey said the recovery “remains uneven with pockets of borrower stress, slowing mortgage momentum, elevated liquidations, and softer demand.”
