Lending surge and easing rates lift borrower confidence – Centrix
New Zealand’s credit landscape is showing encouraging signs of recovery, with households and businesses benefiting from falling interest rates and rising confidence, according to Centrix’s October Credit Indicator.
New residential mortgage lending climbed 21.1% year-on-year, while total new household lending increased 20.2%. Borrowers are increasingly refinancing to lock in lower rates, as the decline in the official cash rate (OCR) continues to support activity.
Consumer credit demand also lifted 5.4% year-on-year, driven by personal loans (+7.9%) and Buy Now Pay Later (+9.2%) applications, pointing to renewed consumer confidence.
“The continued decline in the official cash rate is beginning to reshape New Zealand’s credit landscape, providing a much-needed boost to both households and businesses,” said Centrix Managing Director Keith McLaughlin (pictured).
This improvement comes as the Reserve Bank’s November Financial Stability Report notes that financial risks remain elevated amid global uncertainty. However, it said banks are resilient and well-positioned to support recovery, with lower interest rates and strong export activity helping steady the domestic outlook.
Arrears continue to ease despite cost pressures
The proportion of consumers behind on payments fell to 12%, extending a year-on-year improvement.
Late-stage arrears (90+ days past due) rose slightly to 80,000, suggesting some households remain under strain despite improving conditions.
Financial hardship cases remain largely steady, though personal loan hardship reports have increased 46% year-on-year, now accounting for 21% of all hardship cases. Mortgage hardship is easing, now representing 42% of the total.
Business credit improves as defaults fall
Business credit demand climbed 3.5% year-on-year, led by a 31% rise in hospitality, followed by education/training and retail trade. Defaults fell 13% from a year earlier, with average business credit scores steady at 747.
“While some sectors and regions continue to face challenges, the overall improvement in credit demand, arrears, and business defaults is a good step towards confidence gradually returning to New Zealand’s households and businesses,” McLaughlin said.
Liquidations and construction outlook stabilising
Signs of recovery are emerging across multiple industries, with liquidation rates improving in seven of 19 sectors – notably wholesale trade, finance, and professional services.
Construction remains the most affected, with 726 firms liquidated in the past year, a 23% annual rise, though this represents just 0.9% of all registered construction companies. With more than 84,000 construction firms nationwide, stabilising consent levels suggest the sector may be nearing the end of its downturn.
The hospitality sector followed with 303 liquidations, up 41% on last year.
Regional recovery uneven but trending positive
A clear North–South Island divide persists in credit performance. The South Island leads improvement with lower arrears and stronger lending growth, buoyed by dairy farming and hospitality strength.
In contrast, Northland, Gisborne, and Wellington continue to lag, with higher arrears and slower construction activity.
Outlook: Confidence building into 2026
As 2025 closes, Centrix data point to a cautiously optimistic outlook. Falling arrears, stronger credit flows, and resilient business lending are paving the way for a rebound in 2026.
With legislative updates to the Credit Contracts and Consumer Finance Act (CCCFA) still ahead, credit conditions remain dynamic – but the tone has shifted clearly toward recovery.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
