Car loan arrears steady

There are signs of sustained improvement in automotive finance repayment trends after vehicle loan arrears held firm at 5.1 per cent in October, well below the peak of 6.5 per cent recorded in March 2024.

It comes as Centrix reports that consumer arrears in general are continuing to improve after falling to 11.83 per cent of the credit-active population in October, down from 11.99 per cent the month before. 

Its latest credit indicator report shows the number of people behind on payments dropped from 465,000 to 459,000 over the same time frame.

“This marks the lowest arrears level in more than two years, with the rate now 2.5 per cent lower than a year ago, signalling a strong pace of recovery,” the report adds. 

“Among those in arrears, 177,000 consumers are 30-plus days past due, including 84,000 at 90-plus days.”

Monika Lacey, chief operating officer at Centrix, says New Zealand’s consumer arrears trends remain positive. 

“Mortgage arrears have fallen to a two-year low at 1.35 per cent, with 20,900 mortgage accounts past due,” she adds. 

“Credit card and vehicle loan arrears remain steady, both well below their peaks earlier in the year.”

At the same time, demand for consumer credit has increased as Centrix notes lending for vehicle and personal loans, credit cards, overdrafts, and buy now, pay later has risen seven per cent year-on-year.

Business credit demand is up three per cent year-on-year, “signalling steady growth across key sectors”. 

Hospitality led the surge in October with 38 per cent growth from a year ago, followed by education/training up 22 per cent and retail trade climbing 19 per cent.

The latest figures also show company liquidations remain elevated, with October marking the highest monthly number of liquidations since 2011. 

Lacey says: “This is a sign of both the persistent financial pressure many businesses are under, as well as increased auditing and enforcement by IRD.”