Consumer credit: ‘Kiwis are finding it harder to pay their bills’

Demand for consumer credit is increasing, though arrears are continuing to increase.

Credit bureau Equifax said demand for credit rose 3.9 percent last month against the same time last year, with home loans up nearly 16 percent and personal loans up 17 percent.

However, bureau head Nick Foster said the double-digit increase in consumer loan demand compared with unusually low demand the year earlier, as the upper North Island was hit by a number of destructive storms, including Cyclone Gabrielle.

He said the level of arrears across all consumer credit portfolios was growing, with increased defaults in home and auto loans, though the rate of arrears in personal loans and credit card was slowing.

“There is definitely pain in the economy and Kiwis are finding it harder to pay their bills. There’s no doubt about that,” he said.

“It’s not falling off a cliff just yet.”

The level of hardship had been increasing alongside rising interest rates, he said.

“But less of an issue than I would have predicted. I think that’s where the hardship reporting becomes important so people can avail themselves of the ability to speak to their bank or their lender and ask for either payment deferrals, or to be put into a hardship arrangements.”

He said cases of financial hardship were increasing, with 11 consecutive months of reported cases of increased hardship.

While business confidence was steady and demand for commercial credit was approaching normal levels, Foster said trade credit demand remained weak and the rate of non-performing loans was increasing.

“Across the board, you can actually see there is less demand coming through.”

Accommodation and food services had fallen since the Christmas peak, but so had transport and warehousing, retail and residential construction.

According to the news on Radio New Zealand

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