Homeowners Miss Mortgage Payments More

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Credit bureau Centrix says mortgage arrears increased for the eighth month in a row in March.

More households are struggling to repay their mortgages. The number has increased by 26% from last year. 19,300 accounts are now past due.

Credit bureau Centrix has reported that mortgage arrears have increased for eight straight months, according to new data for March.

More people have fallen behind on their payments. The percentage increased to 11.8%. This means about 427,000 individuals are affected.

Keith McLaughlin, the managing director, stated that borrowers prioritize mortgage repayments, causing the high rate of arrears. The reason for this is due to high interest rates and inflation.

He said that some households are starting to feel the impact of the rise in interest rates and living costs. This indicates financial pressure.

McLaughlin said he was worried about the ongoing rise in late mortgage payments.

Kiwis know how to prioritise who they need to pay first. If they have multiple debts, they will usually pay the ones with the highest interest rates first. They also prioritise paying bills for essential services like rent, electricity and groceries. Kiwis are aware of the consequences of not paying their bills on time, such as debt collection agencies and additional fees. By prioritising their payments, Kiwis can budget and manage their finances effectively."

You usually prioritize paying your car loan or mortgage. If money is tight, you may postpone paying your buy-now-pay-later or personal loan for a month and pay it later.

Mortgage lending decreased due to declining sales volumes. Lending went down by about 48% compared to last year.

McLaughlin said car loan arrears increased 3.6 percent compared to last year.

Losing your car is bad because it can make you lose your job. You need your car to go to work.

He thought more people would fall behind on payments soon.

I don't see a circuit breaker. Maybe during the months of September and October, when Summer is close and there's more stability and interest rates, plus the cost of living goes down, we'll see more clarity and consumer confidence. That could lead to things getting better.

Right now, I don't see anything that will greatly change that.

Reserve Bank: Household Balance Sheets Strong Despite Challenges

Christian Hawkesby's photo was provided by the Reserve Bank.

The bank system is strong despite rate increases. The Reserve Bank believes people will have trouble paying off their mortgages.

The Deputy Governor Christian Hawkesby talked about increased debt costs during the pandemic. The costs had been low before but they're not anymore.

He said that households with a mortgage will have to use twice as much of their disposable income to pay their mortgage interest this year. The share of their income required will increase from 9% to about 22%.

Hawkesby spoke about how households still have strong balance sheets. This means that they have enough money and assets to cover their debts. Additionally, many people who have mortgages own more of their homes than they owe. This creates a buffer in case of financial trouble.

The speaker claimed that arrears are rising at the beginning phase. Borrowers returned to their standing before the pandemic. The arrears are still lesser than the Global Financial Crisis time.

Hawkesby said the economy is strong. Households and businesses aren't in financial trouble. The labour market is good.

People might struggle to make their mortgage payments this year because mortgage prices are changing and the job market is getting worse.

Banks can help customers if they need it. Banks have made recent profits. Banks have strong capital positions.

He said to talk to your bank if you're struggling financially and see if they offer help.

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