NZ credit data shows stable home loans but rising strain in personal lending
New Zealand's consumer credit landscape showed a mixed picture through May, according to Equifax's latest NZ Market Pulse.
While mortgage stress remains contained, unsecured lending is showing clearer signs of pressure, and the property market continues to split sharply between resilient regions and softening metropolitan centres.
Mortgage shopping accelerates despite low arrears
Home loan enquiry volumes are running 9.7% ahead of last year to Week 20, even as arrears sit at a low 0.56%.
Consumer confidence told a similar story: the ANZ-Roy Morgan index lifted to 86.5 in May from 80.3 in April, but remained well below January levels, while the major household purchase indicator improved only to -20 — still firmly negative.
Nick Foster (pictured), head of solutions at Equifax New Zealand, said the enquiry surge shouldn't be read as a sign of market strength.
"This isn't a sign of a strong property market; it's a reflection of rate-sensitive consumers aggressively shopping around in a competitive mortgage market, with lender-switching now making up a quarter of all new mortgage lending," Foster said.
That shopping-around behaviour comes ahead of a genuinely split rate outlook: Westpac, ASB, and Kiwibank expect the RBNZ to hold the OCR on 8 July, while ANZ and BNZ are calling a hike — though all five agree rates are heading higher over the medium term, with peaks ranging from 3.25% to around 4%.
Auckland lags as regional markets outperform
Auckland led the property market's regional split to the downside, recording the weakest annual performance nationally at -3% year-on-year, while Southland (+6.3%) and the West Coast (+5.5%) continued to outperform.
Foster said the divergence reflects deeper structural pressures in the country's largest city.
“Auckland recorded the weakest performance in the country at negative three percent year-on-year, reflecting softer demand, elevated housing supply, and deep ongoing affordability constraints," he said.
Unsecured lending shows the sharpest strain
Personal loans remain the standout area of stress. Hardship volumes in that category are running 27.3% above last year, even after a 5.7% month-on-month improvement, and arrears among non-major lenders have climbed above 5.7% — more than double the rate at the big five banks.
Foster said this points to where genuine financial pressure is concentrated.
"The real pocket of strain is emerging in the unsecured lending space, particularly outside the traditional banking sector... financial stress hasn't disappeared; it is concentrated heavily among non-traditional finance lines as more vulnerable borrowers look to manage everyday cash flows," he said.
Discretionary spending edges up, but recovery stays fragile
Card spending rose 1.8% month-on-month in May, helped by a rebound in hospitality and apparel as fuel prices eased from earlier highs. Foster cautioned against reading too much into the improvement.
"Easing fuel prices provided immediate, selective relief at the pump... [but] the broader recovery remains fragile and highly sensitive to ongoing household affordability constraints," he said.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
