The report said more people were missing payments on their bills due to cost pressures and increased interest rates.
These views come in the latest monthly report from the credit management company, Centrix.
It said discretionary spending was evaporating, with new Buy Now Pay Later (BNPL) enquiries down 27% in a year.
And people who were paying their mortgage through gritted teeth were missing some payments on their cars, with vehicle arrears at a three year high.
And the demand for retail credit was down one fifth in a year.
Arrears across all consumer products rose 8% year-on-year.
Arrears on vehicle loans rose for the fifth month to 4.8%. And as household pressures continued to grow, more people were seeking help to fund spending – this hit a 10-month-high.
What people have been less able to do is buy a house, even though prices have been coming down. Earlier research said the higher costs of interest payments more than cancelled out the falling price of a home, and new residential mortgage lending was down by 33% in the last year as a result of this burden.
Turning to the business credit sector, overall credit demand was down 3% year-on-year. However, the retail sector had seen credit demand fall 20% year-on-year due to persistent weakness in the economy.
And ongoing cost of living pressures continued to see Kiwi households slow down their retail sales spending.