Liquidations rise as Inland Revenue tightens tax enforcement
New Zealand’s borrowers are tapping credit at a brisk pace even as financial stress builds, according to the latest Centrix Credit Indicator, pointing to an economy in transition rather than a clean rebound.
Personal loan arrears hit decade high
Personal loans are the clearest pressure point. Centrix reports that “personal loan arrears reach the highest level recorded in the past decade – climbing to 10.2% in January,” up 6% year-on-year. Personal loan hardship cases have surged 45% over the same period and now account for 24% of all reported hardship, underscoring how vulnerable cash‑strapped households have become.
Overall consumer arrears followed their typical post‑holiday pattern but at elevated levels. In January, 12.56% of the credit‑active population were behind on repayments, up from 12.07% in December. That equates to around 491,000 people in arrears, including 94,000 who are more than 90 days past due.
Despite the seasonal spike, Centrix notes arrears remain “down overall year-on-year,” hinting at a gradual underlying improvement.
Refinancing fuels mortgage and household lending surge
Demand for credit remains above last year, led by home loans. Consumer credit enquiries rose 8.3% year-on-year, with mortgage enquiries up 23.5% and personal loan enquiries up 13.5%.
Credit card applications fell 18.6% and Buy Now Pay Later enquiries were broadly flat, suggesting borrowers are reshaping – not just expanding – their borrowing mix.
Refinancing is a defining feature of the housing market. In December, 46% of new mortgage lending was for borrowers switching loans, and 71% of that movement occurred between the big four banks. Approved new mortgage lending jumped 34.0% year-on-year in the January quarter, while new non‑mortgage lending climbed 15.9%, lifting overall new household lending 32.5%.
The Reserve Bank’s decision to hold the official cash rate at 2.25% “for the foreseeable future to help drive stabilisation” is designed to guide inflation back into its target band while supporting a slow recovery.
Business liquidations stay elevated as IRD steps up action
Business conditions remain fragile. Business credit demand is down 1.0% year‑on‑year, even as new business registrations climbed 10% over the past 12 months.
Company liquidations rose 16% on a rolling 12‑month basis to 2,952, with construction and hospitality hardest hit. Nearly 70% of liquidation applications are now initiated by Inland Revenue, up sharply from 30–40% in 2020/21, reflecting tighter enforcement of tax debts.
Monika Lacey (pictured), chief operating officer at Centrix, says “the road to recovery seems to be coming into clearer view, but there are still challenging times ahead as the economy turns a corner.”
For households and small businesses – many of them “mum and dad” owners leveraging home equity – the data reinforces the need to seek expert help early to avoid long‑term financial damage.
To compare the latest Centrix figures with the previous data, click here.
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