470,000 Kiwis behind on repayments as festive season spending pushes more into debt

More New Zealanders are starting the new year in debt after a festive season that hit constrained budgets, new data shows.

The number of people behind on their payments rose to 470,000 in December, up 6000 from the previous month, according to Centrix’s latest Credit Indicator report.

Consumer arrears levels were 1.3% higher year on year.

“Following the festive season, we’ve observed the seasonal uptick in consumer arrears as people lean on credit products to help celebrate the end of the year,” Centrix managing director Keith McLaughlin said.

The number of people behind on their repayments rose to 470,000 in December. Photo / 123RF

Specifically, arrears for personal loans rose to 9.2% in December — up from 8.1% in November.

Financial hardship cases rose significantly, up 19% year on year.

Of the 14,300 accounts reported in financial hardship in December, nearly half (46%) relate to mortgage payment difficulties.

Mortgage arrears were 7% higher year on year. In December, the number of people behind on their mortgage repayments increased to 22,100, up 1100 compared with November.

McLaughlin said general sentiment was the Reserve Bank would cut the Official Cash Rate again this month.

“It’s evident Kiwi households and businesses are ready for more financial stability against a backdrop of global uncertainty and a challenging local environment,” he said.

“We can see relief would be welcome for many households and businesses across the country.”

He said it was important for anyone feeling the pinch post-Christmas to get in control of their financial situation by speaking with an expert to avoid causing any long-term financial damage.

Construction sector leads liquidations

It remained a difficult year for businesses last year with liquidations rising to 2504, from 1837 in 2023.

Construction was hard hit with liquidations up 41% year on year. There were nearly 200 building firms liquidated in the final quarter of the year, Centrix said.

“Residential new home builders recorded the highest number of annual liquidations, with 235 liquidations over the 12-month period,” McLaughlin said.

The transport industry — which includes road freight, postal/courier and delivery services — experienced a 79% rise in liquidations from 73 in 2023 to 131 in 2024.

“This highlights the challenges the sector is facing due to higher costs and reduced demand across the economy,” McLaughlin said.

Business credit defaults also remained high year on year in December. Construction credit defaults rose 40% year on year, followed by transport (36%) and hospitality (17%).

“While many were waiting for relief, at this stage it’s unclear what 2025 has in store for Kiwi households and businesses,” McLaughlin said.