Mortgage arrears are the calm before the storm — here is what to watch
New Zealand home loan arrears are holding well below last year's levels, but a sharp spike in credit card hardship and a slump in consumer confidence to a three-year low are signalling that household financial resilience is under growing pressure — with implications for how brokers assess borrower serviceability in the months ahead.
That is the picture emerging from Equifax NZ's May 2026 Market Pulse, which draws on bureau data through March 2026 and economic indicators through April 2026.
Home loan arrears contained, but the refinancing surge is easing
Home loan enquiry volumes remain above last year, tracking 6.9% ahead of 2025 year-to-date through Week 15 of 2026. But the composition of that demand has shifted.
According to the Equifax report, enquiries "have been driven more by refinancing and lender switching than by a broad lift in new purchase activity, as borrowers compare rates and cash-back offers." The earlier burst of switching activity appears to be losing intensity as rate-sensitive borrowers have already tested the market.
On the credit health side, the picture remains relatively benign for mortgage holders. Home loan 30DPD+ arrears (accounts more than 30 days past due) fell a further 2 basis points in March to 0.59%, sitting 6 basis points below the same period last year.
Serious delinquencies (90DPD+, more than 90 days past due) were unchanged over the month and remained below year-ago levels — suggesting that, to date, the mortgage book has stayed insulated from the broader cost-of-living deterioration.
NZ credit hardship 2026: personal loans and credit cards under pressure
The more dramatic warning in the Equifax data comes not from mortgages but from unsecured credit.
Credit card hardship volumes surged 13.8% month-on-month in March — a sharp move the report describes as "sudden vulnerability." Personal loan hardship, while easing slightly on the month, remains 30.7% above the same period last year; the report described unsecured personal lending as "the primary source of financial strain."
These trends point to growing pressure on non-asset-backed borrowers that has not yet reached the mortgage book — but the direction of travel is clear.
The Equifax report noted that "higher petrol costs, economic concerns and potential OCR increases are weighing on confidence," with the share of households saying it is a good time to buy a major item falling to a reading of -25. ANZ-Roy Morgan consumer confidence had already dropped sharply from 91.3 in March to 80.3 in April — the lowest monthly reading in approximately three years.
The RBNZ's May 2026 Financial Stability Report reinforced the forward-looking concern, warning that higher oil prices "can affect the ability of households and businesses to service debt," with transport and parts of the primary sector among the most immediately impacted.
Property market: South Island outperforms as Auckland slides
The property market tells its own split story. The Valocity Value Index shows the national average property value nudging up just 0.2% in April, masking stark regional divergence. Nine of 16 regions recorded positive annual growth, led by Southland (4.8%), West Coast (4.3%), and Canterbury (3.1%). Auckland, by contrast, fell 3.0% year-on-year, with Wellington and Nelson also recording notable contractions.
The Valocity commentary attributed the urban underperformance to a combination of creeping mortgage rates and a softening labour market, with unemployment at 5.3% in the March 2026 quarter — factors that have "sharply reduced borrower serviceability" and left buyers in major centres "highly risk-averse."
For brokers, the data presents two stories running in parallel: a mortgage book that remains surprisingly resilient at the arrears level, and a consumer credit landscape where hardship is rising sharply, sentiment is at multi-year lows, and property value growth is increasingly confined to provincial markets far from where most borrowers live.
Brokers can access the full Equifax NZ May 2026 Market Pulse for the complete credit demand and arrears data across home loans, personal loans, credit cards, auto loans, and utilities.
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