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According to the latest Centrix report, New Zealand households, facing high interest rates and inflation, are beginning to show signs of financial relief.
Data indicates that missed payments and defaults have decreased, suggesting that the worst of the financial strain may have passed, with a potential economic recovery on the horizon for Kiwis by late 2024.
Rising Economic Strains on Households
For the past two years, New Zealand families have struggled with the rising cost of living. Interest rates and inflation have driven up the price of essentials, leaving many households with little room to breathe.
Families have scaled back on non-essential spending, postponing purchases and even delaying payments on critical bills, such as power to survive, some would even consider getting second jobs.
“We knew households were under pressure, and it’s encouraging to see that when faced with tough choices, such as a mortgagee sale or renegotiation with a lender, borrowers and lenders are working together to find solutions,” Centrix managing director Keith McLaughlin said.
Emerging Signs of Financial Relief
Despite ongoing financial challenges, Centrix’s latest data shows a drop in defaults and missed payments, signalling a shift in financial conditions. This improvement is attributed to the recent reduction in interest rates, which is helping households better manage mortgage repayments and other loans.
Future Outlook and Policy Implications
While recent improvements offer hope, experts such as Dominick Stephens – Chief Economic Adviser at The Treasury and Sharon Zollner – Chief Economist at ANZ.
They believe that policymakers may need to introduce additional support measures, such as housing initiatives or financial relief, to secure long-term financial stability for households.