There are signs of gradual improvement in New Zealand's credit landscape despite a challenging environment, although the recovery remains uneven across products, regions, and sectors, Centrix said in its May Credit Indicator report on Wednesday.
Consumer credit demand was down 1.9% year over year in May, with continued strength in auto, personal, and home loan enquiries offset by weaker demand elsewhere. Mortgages saw an over 11% growth over the period, while auto loans and personal loans grew 9% and 5.7%, respectively. Non-mortgage lending was up more than 14% year over year.
At the consumer level, fewer borrowers are falling behind on repayments, and arrears rates are continuing to decline. This reflects the combined effect of lower interest rates in recent periods and a slow but steady economic recovery, the report said.
In April, more than 11% of consumers were behind on payments, down from roughly 12% a month earlier. Arrears across mortgages, personal loans, credit cards, and auto lending were all trending down. The total number in arrears dropped to 443,000, 9.5% lower year over year.
For businesses, demand for credit was down 3.6% year over year and company liquidations remain elevated, rising 17% overall, particularly in construction and hospitality. Small business owners are exposed, particularly those relying on home equity.
Credit demand increased by 22% in the hospitality sector over the past 12 months, with agriculture up 13%.