Car loan repayments slip

Arrears on vehicle loans have risen to their equal highest level in the past two years after surging to 5.7 per cent of active credit accounts, the latest figures from Centrix reveal.

The credit bureau says the figure at the end of May represented a 31 per cent increase from the same month a year ago and was up from 5.4 per cent in April. 

It also matches the 5.7 per cent in January 2023 and is the joint highest total since June 2020 when the number of automotive loans in arrears stood at 6.2 per cent.

Meanwhile, the bureau’s June credit indicator report notes the demand for new vehicle loans remains “buoyant” with inquiries up 17 per cent that month when compared with the numbers from the same period of 2022.

Keith McLaughlin, managing director of Centrix, adds that consumer arrears overall have exceeded 2019 levels for the first time with 11.7 per cent of the active credit population behind on repayments.

“Since the start of 2023, we’ve seen a degree of uncertainty and yo-yoing across a number of our credit indicators. But the clear takeaway is arrears are rising,” explains McLaughlin, pictured.

“There’s no question some Kiwi households and businesses are walking an economic tightrope. While homeowners contend with rising mortgage interest rates and the financial squeeze, business owners are grappling with downturned activity and spending.”