23-07-2025
Sharp rise in housing and personal loans hardship cases over past year
Photo:
RNZ
Banks and other lending groups are being more accommodating in their approach to borrowers in deep financial trouble, according to a credit agency.
Equifax's latest report shows a sharp rise in hardship cases particularly in housing and personal loans over the past year -- up 25 and 40 percent respectively for the 12 months ended May.
New Zealand manager Nick Foster said unlike past downturns lenders have not been taking an unnecessarily hardline approach.
"The change in lenders' attitudes is markedly different to the GFC (global financial crisis) where we saw a lot of people have their mortgages foreclosed for going into serious default listing within the [credit] bureau.
"We have in the last year seen a big increase in defaults in quite a while -- that's when it goes beyond 90 days in arrears --... but on the whole that's the very last resort for lenders and we're not seeing as much as we have in previous cycles of economic uncertainty."
Foster said lenders were much more open to making schemes of arrangement with troubled borrowers to restructure loans.
However, data showed individuals
dipping into their Kiwisaver accounts for hardship
reasons and withdrawing $470 million in the past year.
Overall, arrears levels were generally steady in May on the month before, and in many categories were close to or a shade below last year's levels.
However, personal loans in arrears were higher, which Foster said reflected that most were unsecured and so there was nothing for a lender to be able to take back to cover long running debt.
He said generally households were keeping control over debt levels as shown by soft demand for big consumer ticket items, and the rise in housing credit enquiries was largely existing borrowers looking to refinance at lower rates.
