Household repayments ease across the board, but hospitality and construction failures keep climbing.
New Zealand households are catching up on repayments at the fastest pace in four years even as company failures continue to climb in vulnerable sectors like hospitality and construction, according to Centrix's latest Credit Indicator.
Consumer and mortgage arrears both improve
Consumer arrears fell to 10.95% of the credit-active population in May, the lowest level in four years, with 432,000 people behind on payments — down 11,000 on the month and 12.5% lower than a year ago.
Residential mortgage arrears followed the same trend, easing to 1.27%, the lowest reading since September 2023, with 20,700 home loan accounts now reported past due.
Centrix chief operating officer Monika Lacey (pictured) said the improvement reflects a genuine shift in household finances.
"This suggests many borrowers are in a stronger position than they were a year ago, helped by lower mortgage rates and a gradual easing in repayment pressure," Lacey said.
That said, the recovery isn't universal. Some 89,000 consumers remain 90 or more days overdue, with renters accounting for 74,000 of those cases, a reminder that stress is concentrated among households without home equity to fall back on.
Lending cools despite renewed mortgage interest
Credit demand overall softened, down 5.3% year-on-year in June, as households pulled back on discretionary borrowing: credit card demand fell 14.3% and Buy Now Pay Later demand dropped 18.7%. Mortgage enquiries bucked the trend, rising 12.5%, alongside an 8.8% lift in auto loan demand, a sign borrowers remain engaged with larger, purpose-driven credit even as smaller-ticket spending cools.
Looking at the broader May quarter, approved new mortgage lending fell 2.4% compared with a year earlier, suggesting fewer borrowers are refinancing with a new provider and purchasers are taking longer to weigh affordability before committing.
That caution lines up with the most recent REINZ data, which shows sales volumes falling and stock remaining elevated even as the national median price holds around $775,000, a market where buyers have more time, and less urgency, to commit.
The rate outlook adds a further layer of uncertainty: an immediate OCR hike in July now looks unlikely after oil prices eased, easing near-term pressure on borrowers.
Business failures remain a stubborn trouble spot
While household credit health improves, business conditions tell a different story.
Company liquidations are tracking toward their highest level since 2010, with construction again the biggest contributor at 755 firms over the past year. Hospitality liquidations jumped 51%, the sharpest deterioration of any sector, while retail trade failures rose 35%.
Lacey said the pattern underscores the value of early intervention for both households and businesses.
"For consumers or businesses under pressure, early engagement with lenders, financial advisers, or other trusted support providers remains the best step before short-term stress becomes harder to manage," she said.
Read the full Centrix Credit Indicator report for more detail.
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