Consumer debt arrears dropped to 10.95% of the credit-active population in May, the lowest level in four years, according to credit reporting company Centrix.
Some 432,000 people were late on payments by any period, down 11,000 from the previous month and 12.5% lower than a year ago. However, 89,000 people had fallen at least 90 days behind on some borrowing.
"What we are seeing is a continued trend that credit behaviour in New Zealand is starting to really improve and recover," Centrix chief operating officer Monika Lacey said. "Consumer arrears are down at a four-year low which is really positive but there's still a segment of that population, 89,000 people that are 90 days or more overdue. So that's a more concerning population. Once you get that far into debt, it gets a bit sticky. It's probably a result of a life event that's occurred."
Mortgage arrears declined to 1.27%, the lowest since September 2023, with 20,700 mortgage accounts reported as past due. Mortgage inquiries rose 12.5% year-on-year, though fewer new mortgages were being approved than a year ago, suggesting buyers are taking longer to assess what they can afford and fewer borrowers are switching lenders.
Company liquidations stayed high and are expected to reach their highest level since 2010, with just over 3,000 recorded in the last year, up 14%.
Hospitality businesses were hit hardest, with 421 liquidated in the past year, a 51% increase. Construction saw 755 liquidations, while retail trade liquidations rose 35%, with food retailers making up a portion. Lacey described hospitality as one of the most vulnerable sectors, noting that liquidations lag behind the financial difficulties that trigger them by potentially several years.