Less Arrears As Households Adapt To Challenges

Debt

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In April, credit card arrears decreased. This was noticed in the categories. A decline was visible. A picture was included in the article. The photo came from 123rf.

Debt - Figure 1
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Centrix, a credit reporting firm, says households are being more careful about their debt. They have noticed a slight decrease in the number of people falling behind on their payments. They also noticed that people are not asking for credit as much.

A report for April reveals that 411,000 people are not keeping up with their payments. This is a decrease from 427,000 in March and the first decrease in three months.

Mortgage repayment delays lessened for the first time in eight months. Other types of repayment defaults, such as buy-now-pay-later, consumer, and credit card arrears, also decreased. However, auto finance loan defaults increased.

Keith McLaughlin, the head of Centrix, thinks it's too soon to say people are handling their debts well. However, the info shows that borrowers are adapting to high interest rates and a sluggish economy.

Debt - Figure 2
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We can't be sure if the plateau is here, but things look good as arrears growth has slowed down for a month. This could be because people are taking care of their payments or working things out with their creditors during this difficult time.

Since the start of the year, McLaughlin said 10,000 more people have gone on to hardship repayment settings. This shows lenders are cooperating with borrowers to overcome difficulties.

Credit arrears remained at a low level. But, there was a 4% increase from last year's numbers. This is the overall situation.

More people wanted to borrow money, but they wanted different things. Fewer people wanted to borrow money to buy a house. This is because the housing market is not doing well. However, more people wanted to borrow money for things like buying a car. Overall, people wanted to borrow less money than they did a year ago.

Debt - Figure 3
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According to McLaughlin, the business sector is experiencing greater debt pressures. Credit defaults are up by 13% compared to last year. In the same time frame, there has been a 31% increase in company liquidations. Construction and property related businesses are the most affected.

Kiwi business owners are facing a tough time with low unemployment. The economic situation for the rest of 2023 is uncertain.

McLaughlin advised businesses to credit check their potential customers and suppliers. This can help them work with trustworthy entities.

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