The credit reporting agency Centrix reported a 12% decrease in the number of customers with debt arrears in August compared to July and a 1.8% decline compared to the same month last year.
“Consumer arrears, year on year, have improved, and that’s a trend which is good. And if we start to see consumer sentiment improve, then that should flow through into businesses, which will be a really positive outcome for New Zealanders,” Centrix chief operating officer Monika Lacey said.
Credit demand increased, with consumer credit rising 5.6% compared to last year, driven by a significant surge in personal loan applications.
This was their highest level since December 2024.
“Notably, 90+ day delinquencies have now fallen for the fourth consecutive month, and mortgage enquiries rose 10.6%, largely driven by increased refinancing activity,” she said.
However, company insolvencies stayed elevated, making up almost 70% of all liquidation applications, compared to a range of 30% to 40% during the pandemic.
Lacey explained that the rise was due to the low level of arrears reported during the Covid period, when the credit sector took a more lenient approach to pursuing bad debts.
“So the liquidation activity that we’re seeing, whether it’s related to IRD or not, is what we would call a lag indicator.”
She warned that the lag had a prolonged effect and anticipated it would take time for the current level of arrears to fully work its way through the system.
“While challenges remain and the economy is still operating below potential, the improvement in arrears, strengthening mortgage performance, and rising credit demand all suggest consumers and businesses could be beginning to regain confidence, offering some hope of a more positive outlook for New Zealand’s credit markets.”
Business conditions were beginning to improve, despite company liquidations increasing by 26% compared to last year.
“The rate of increase has eased in recent months, and sectors such as agriculture, mining, and information media are now showing improving liquidation trends,” Lacey said.
“Credit defaults are declining in construction, retail, and transportation, reflecting early signs of economic recovery.”