Mortgage stress should be nearing its peak, as loan rates drop significantly. Photo: 123RF
The proportion of home loan payments past due is at the highest level since at least 2017, new Centrix data shows.
The data released Monday showed 24,000 home loan accounts with payments owing, up 700 on the previous month and 7 percent on the year before.
In total, 1.58 percent of home loans were in arrears, up from 1.55 percent in February. The number more than 90 days overdue was holding steady.
Economist Shamubeel Eaqub said mortgage stress should be nearing its peak, because home loan rates had dropped significantly and living costs were not rising as quickly, compared to incomes.
Centrix managing director Keith McLaughlin said home loans were the biggest financial commitment many people had and the main pain point for households.
Many small business owners were also facing tax bills at this time of year and cashflow became tight, he said.
"They probably have difficulty paying their mortgages and their tax at the same time, so it is a bit of a crunch time, particularly for those owners of small businesses who have a business secured over a home loan."
He agreed the stress should ease, as the reduction in the OCR started to flow through to more money in people's pockets.
New mortgage lending rose by 23.3 percent, compared to the same period a year earlier, driven by increased market activity, but it remained 18 percent below the levels seen during the 2021 property market boom.
Kiwibank chief economist Jarrod Kerr said the lift in arrears was a byproduct of the recession of recent years. He said the arrears rates had not reached concerning levels, but some people were experiencing pain.
"Businesses and households… we'll see it continue into the second half of this year. We're expecting the labour market to get a bit better heading into 2026, but there's still a lot of uncertainty out there that is weighing on business owners' minds.
"Even though we're optimistic that, in the second half of this year, things will pick up, businesses are not there yet, and uncertainty kills growth and hiring intentions."
He said conditions were likely to worsen before they got better.
"It's concerning, but not at levels that would really worry us from a stability point of view. Banks put money aside for this sort of thing and we're not drawing down on that yet."
Some 14,400 accounts of all types were reported in financial hardship in March, a decline of 200 from the previous month, but up 11.5 percent year-on-year.
Although financial hardship cases have risen since November 2022, this has slowed won in recent months.
Mortgage payment difficulties accounted for 45 percent of these cases, followed by credit card debt at 30 percent and personal loan repayments at 17 percent. The highest rate of financial hardship was among people aged 35-49.
The areas with the highest arrears rates overall were Kawerau, Opotiki, South Waikato and Ruapehu.
The data noted that 22,000 borrowers aged over 65 had a mortgage bigger than $500,000 and 16 percent of all people 65-plus had a home loan.
Company liquidations were also up 35 percent over the past year, with transportation companies and construction firms particularly affected.
Construction and hospitality businesses had increases of more than 50 percent in the number of liquidations year on year. McLaughlin said that was the result of households with tight budgets cutting back on discretionary spending.
"Many businesses in New Zealand have found their cost base going up, as the cost of goods have gone up, rents, rates insurance. Consumers have been keeping their money in their pockets, because they haven't had the disposable cash, and that's impacted businesses' ability to get cash across the counter and meet their obligations."
That was likely to continue for some time, he said.
"I think there's still a bit of pain to come. I think businesses tend to struggle a bit more in winter, as people tend to hold back on their spending, tend to stay home more - things like new renovations, new purchases tend to get put on hold over the winter period.
"I would expect to see, perhaps in September/October, a bit more stimulation into the economy, which would flow through to businesses."
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