Arrears fall, refinancing rises amid tight credit conditions
Mortgage arrears in New Zealand eased in June, according to Centrix’s July Credit Indicator, giving borrowers and brokers a modest sign of relief.
- 478,000 individuals were behind on payments, down 7,000 from May, representing 12.36% of the credit‑active population
- Mortgage arrears fell to 1.41%, with 21,600 home loans past due, 300 fewer than the previous month
- Mortgage enquiries surged 16.7%, driven largely by refinancing activity
“With 79% of mortgages due to be repriced over the next 12 months, many borrowers may benefit from lower rates,” said Keith McLaughlin (pictured), Centrix managing director.
Lending standards tighten amid economic pressures
Centrix data shows nine out of 10 personal loans are now issued to borrowers with a credit score of 505 or higher, up from 450 in early 2020.
“This shift underscores the impact of the CCCFA and ongoing economic pressures, prompting lenders to maintain tighter credit policies,” McLaughlin said.
The slight year‑on‑year improvement in arrears observed earlier in 2025 has plateaued, with figures now largely unchanged compared to the same period last year.
Business credit demand up, liquidations remain high
Business credit demand rose 8% year‑on‑year, led by:
- Retail and hospitality: +23%
- Financial, insurance, arts, and recreation services: +22%
Despite higher demand, company liquidations remain elevated, up 26% year‑on‑year, though the pace of increase is slowing.
“Construction remains the leading contributor to liquidations, followed by hospitality, which has now overtaken property as the second largest affected sector,” McLaughlin said.
Small businesses and sole proprietors face heightened debt stress, often relying on home equity to sustain operations.
“This group is experiencing elevated debt stress – more than double that of non‑business owners – often relying on home equity to sustain operations,” McLaughlin said.
Outlook for borrowers and advisers
While mortgage arrears have eased slightly and refinancing activity is picking up, Centrix warns that households and SMEs remain under financial pressure.
“In light of these trends, it’s crucial for Kiwi households and businesses to maintain a clear understanding of their financial health and seek guidance from trusted advisors to navigate the economic uncertainties ahead,” McLaughlin said.
Read the full Centrix report for more details.
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