– Vehicle, mortgage, personal loan arrears drop, buy now pay later rise
– Financial hardship increases, company liquidations higher
– Consumer and business credit demand rises
Households are generally managing to stay on top of their debt, but hardship cases and business liquidations continue to rise.
The latest report from credit bureau Centrix showed a marginal increase in the number of customers in arrears to 485,000 in May on the month before, 12.5 percent of the credit active population, but down 1 percent on a year ago.
Managing director Keith McLaughlin said the numbers suggested signs of stability, with the prospect of further improvement.
“We saw many of the major banks cut interest rates again, which could have an impact on household finances over the coming months.”
The number of consumers more than 90 days overdue on payments edged lower to 81,000, while mortgage arrears eased to 1.44 percent, a drop of 700 to 21,900.
For consumers, arrears for vehicle, personal loans, and credit cards decreased, while buy now pay later arrears were higher.
Credit demand picks up – and financial hardship
Consumer credit demand increased 7 percent on a year ago, driven by mortgage lending.
“This growth was largely driven by an 18.6 percent year-on-year increase in new residential mortgage lending, reflecting heightened market activity and borrowers seeking better rates,” McLaughlin said.
“Despite this rebound, mortgage lending remains below the levels seen during the 2021 property boom.”
The report showed an increase of 300 in the number of financial hardship cases to 15,000, which was up 14.4 percent on the year before, with just under half of those related to difficulties in paying mortgages.
Business liquidations rise
Businesses continued to do it tough with a rise in defaults and the number of company liquidations at their highest monthly level since September last year, although the annual increase slowed to 27 percent on the previous year.
McLaughlin put the increase down to a tougher enforcement policy by Inland Revenue in various sectors.
“The construction sector has been hit the hardest – over 750 building firms have gone into liquidation in the past 12 months.
“The highest rates of business failures have been seen in residential construction, property development and operations, hospitality, especially restaurants and cafés, and road freight transport.”
Even so, business demand for credit was higher than a year ago, notably in the retail, hospitality, and financial and insurance sectors.
