Non-performing housing loans up, monthly mortgage arrears down

In the loans by asset quality RBNZ figures, non-performing loans rose by 7.8% - a year-on-year increase of $797 million. This is the second biggest monthly rise since June 2020.

Since mortgage rates started rising in the second half of 2021 and household finances have taken a hit, non-performing loans have risen, although they are not at historically high levels.

In the same figures non-performing commercial loans fell $7 million or 1.4%, bringing the NPL (non performing loans) ratio to 1.09%, while non-performing loans for SMEs rose $8 million or 0.8%, leaving the NPL ratio at 1.19%.

Mortgage applicants cautious

May figures from credit bureau Centrix show mortgage arrears are down for the second consecutive month, but still remain 14% higher than last year.

There are 21,700 home loans overdue, accounting for 1.45% of all home loans. This is 400 down on March.

Also down are mortgage applications as borrowers remain cautious in the flat housing market, Keith McLaughlin, Centrix managing director says.

Insolvencies and liquidations up

Companies are not faring well in the economic climate, he says. Insolvencies are ticking up with 203 in April, a notable 30% increase from the 156 recorded over the same time last year.

Among the insolvencies, 22% were from the construction sector, followed by 17% from the property industry.

Company liquidations are also rising with a 19% increase year-on-year. There were 193 business liquidations in April, compared to 138 in April last year.

In the manufacturing sector, 14 companies were placed in liquidation – the highest monthly total for five years, McLaughlin says.

Meanwhile business credit demand increased by 12% compared to the same time last year, with the hospitality and retail sectors experiencing the most significant rise.