Centrix reports more hardship claims despite dip in arrears
Financial hardship cases rose in June, according to new consumer credit data from credit bureau Centrix, despite an overall decline in arrears.
The update reflects trends seen by members of the Financial Services Federation (FSF), whose specialist lender members serve 1.7 million New Zealanders – representing 49% of the country’s personal consumer loans.
The Centrix Credit Indicator Report noted an increase of 300 financial hardship applications from May to June. Almost half (46%) were related to mortgage stress, followed by credit card (28%) and personal loan (18%) repayment difficulties.
The rise in hardship comes as FSF marks its 60th anniversary. Formed in 1965 as the New Zealand Finance Houses Association, the federation now represents a $20 billion sector of specialist non-bank finance.
FSF urges context and proactive action
FSF executive director Lyn McMorran (pictured) said while the rise in hardship applications is concerning, it’s important to avoid oversimplification.
“It is no surprise that lenders – specialist or traditional – would prefer to see the opposite trend when it comes to hardships, but to avoid oversimplifying what this means in a broader context we need to consider several contributing factors, and where borrowers can go for help,” McMorran said.
Complex borrower circumstances and economic pressures
McMorran emphasised that financial hardship typically stems from sudden or unexpected life changes.
“Borrowers’ financial situations can be complex, and financial hardship is often multifaceted, stemming from an unforeseen change in personal circumstances such as job loss, health issues or disruptions to whanau and living situations,” she said.
These challenges are often compounded by wider economic factors including persistent inflation, job market pressures, and lingering supply chain disruptions, which have carried over from 2021–2022.
Lenders engaging early with at-risk customers
According to McMorran, FSF members – who include Avanti, Turners, MTF, UDC Finance, and American Express – are actively working with borrowers whose situations have changed.
“FSF members are actively engaging with borrowers whose financial situations may have changed to ensure options are discussed early on,” she said.
These discussions may lead to support options such as refinancing, temporary repayment plans, or revised loan structures—often helping customers avoid entering formal hardship processes altogether.
Growing awareness key to prevention
McMorran noted that improved consumer awareness is making a positive difference.
“We are seeing an increased awareness among consumers about the importance of communication with their lender, which we see as a good thing,” she said. “Seeking help early on could mitigate the severity of financial hardship cases by addressing issues before they escalate.”
Advice for consumers under pressure
McMorran urged borrowers to act quickly if they anticipate repayment challenges.
“What is important is to talk to your lender at the first sign that there may be difficulty in making loan repayments,” she said.
“FSF members genuinely want to help their customers, both consumer and small business, and the earlier the conversation is had the earlier it can be worked through together.”
Consumers can also access free support from financial mentors through the MoneyTalks helpline on 0800 345 123 or at moneytalks.co.nz.
