NZ credit conditions steady, but global risks keep pressure on borrowers
New Zealand’s credit environment is stabilising, giving mortgage advisers a more predictable backdrop for first-home buyers, refinancers, and property investors – at least for now.
Centrix’s latest March Credit Indicator reports that consumer credit demand remains above last year’s levels, even though it has eased in recent weeks.
New household lending is up 38.2% year‑on‑year, with approved mortgage lending jumping 40.1%, helped by record refinancing volumes in December and ongoing strength in unsecured personal and auto finance.
Centrix Chief Operating Officer Monika Lacey (pictured) says “New Zealand’s credit environment has been stabilising in recent months,” even as global volatility and higher energy prices add a new layer of uncertainty to the outlook.
Mortgage arrears improve, but deeper stress pockets remain
For home loan portfolios, the headline trends are encouraging. Mortgage arrears held steady at 1.42% of loans in February, with around 22,700 home loans past due – an 8% improvement on a year ago as lower mortgage rates ease repayment pressure. Overall consumer arrears fell to 12.09% of the credit‑active population, down from 12.56% in January.
However, Centrix notes that 97,000 consumers are now more than 90 days in arrears, the highest level since July 2023, showing some households remain under sustained financial pressure. Arrears are also more pronounced across personal loans and Buy Now Pay Later, even as credit card and auto loan arrears improve.
Lacey cautions that “Together, these trends point to an economy that is improving, but still uneven across sectors and households.”
Adding to the uncertainty, ASB now expects New Zealand’s 2026 recovery to be “put on ice”, cutting its GDP forecast and pushing the rebound into 2027, while warning that higher oil prices and the Middle East conflict will lift fuel costs and inflation. Westpac has issued a similar downgrade, and both banks now see weaker growth but stickier inflation, complicating the Reserve Bank’s cash‑rate path and likely prompting tighter serviceability tests even as Centrix’s near‑term arrears data improves.
Global risks could test a fragile recovery
Average mortgage sizes remain highest in Auckland at about $715,000, compared with a national average around $532,000, with nine districts now above the $500,000 mark. That leaves many recent buyers more sensitive to shifts in mortgage rates and employment conditions.
On the business side, overall credit demand is down 2% year‑on‑year, but trends vary sharply. Hospitality remains the most vulnerable sector, while agriculture, financial services, and professional services continue to perform relatively well.
Company liquidations are still elevated, led by construction and hospitality, reinforcing the need for advisers to look closely at industry exposure when working with self‑employed clients or SME guarantors.
Lacey concludes that “it remains important for households and businesses under strain to seek trusted financial advice early.” For mortgage advisers, that means leaning into their role as long‑term risk partners – not just rate‑finders – in what is a steadier, but far from risk‑free, credit cycle.
Access the full Centrix report for more information.
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