One in five 'would miss mortgage payment'

John Scott of Dun & Bradstreet (NZ)

One in five Kiwis with a mortgage are prepared to miss a repayment and 51 per cent of people admit to making at least one bill payment late in the last 12 months with credit cards, pay TV, phones, internet and council rates presenting the greatest challenges.

These are just two of the findings from a Dun & Bradstreet (D&B) Payment Priorities Study released today.

The study surveyed consumer payment priorities for 12 different types of bills – ranging from the home mortgage to internet bills – and the key influences on changing payment patterns.

The study's findings include:

* 20 per cent of people with a home mortgage say that it is the payment they would be least likely to make if they did not have enough money to pay all their bills;

* 35 per cent of respondents who receive a Pay TV bill say this is the bill they are least likely to pay followed by 27 per cent of those with a mobile phone bill, 17 per cent of those with home internet, 13 per cent of those with electricity, 11 per cent of those who receive a gas bill and 10 per cent of those who receive a credit card bill;

* In all 51 per cent of New Zealanders admit to paying at least one of the following bills in an overdue manner in the last twelve months – credit card, Pay TV, mobile phone, home phone, home internet and Council rates;

* Around 10 per cent of late bill payers say they have been contacted by a debt collection agency about an overdue bill. However, 46 per cent of the same group say that if the first contact about an unpaid bill came from a debt collection agency they would be more likely to pay that bill immediately; and

* 60 per cent of people say that being aware that late payments would be listed on their credit report would make them more likely to pay their bills on time – a finding that comes as the New Zealand Privacy Commissioner considers changes to credit reporting laws.

The study's findings challenge a number of currently accepted views in the credit industry particularly the priority given to mortgage repayments.

Mortgages are generally believed to be the highest priority for New Zealand households but the findings show that as the economic outlook tightens, and this impacts household incomes, many are focusing on the absolute essentials even if that comes at the expense of their mortgage.

Dun & Bradstreet (NZ) general manager John Scott believes the study points to the emerging priorities of New Zealanders as the economic downturn forces people to focus on daily expenses.

"That one in five Kiwis with a mortgage would be prepared to make a repayment late challenges accepted orthodoxy and points to new priorities for consumers", said Scott.

"New Zealanders consider home phones and utilities as daily essentials and will strive to pay these bills when they fall due. While the mortgage is considered extremely important, the study finds that when push comes to shove people are prepared to miss a payment to ensure they have free cash for their daily essentials."

The study identifies that New Zealanders would respond to a number of key influences when considering which bills to pay. Sixty per cent of Kiwi's advised that they would be more likely to pay a bill on time if they were made aware that late payment would be listed on their credit report.

Fifty-three per cent of those who had actually paid a bill late in the last 12 months said being aware that this late payment would be listed on their credit report would make them more likely to pay the bill on time.