Fewer households behind on mortgages but company liquidations jump

Tuesday, 2 September 2025

Households with home loans have been remarkably resilient throughout several years of excessively high mortgage rates.

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In the blizzard of bad financial news, a bright spot: the number of people behind on their home loan repayments has fallen.

July saw the number of home loans on which borrowers had missed payments drop by 400 from the end of June to 21,200 home loans past due.

The proportion of loans with missed payments is now 1.38%, down significantly from its 1.58% peak in March, Centrix data showed.

But it’s not all good news from Centrix, which compiles credit reports on individuals and businesses using information passed to it by the likes of banks, insurance companies, power companies and telecoms providers.

Things are looking less promising for other kinds of credit, including electricity debts.

Centrix reported arrears rose to 12.41% of the “credit active” population, a term used for people who have at least one “credit” contract with a business, which can include a power account.

The Reserve Bank has cut the official cash rate to 3%, the lowest in three years, offering relief for homeowners like Auckland buyer Angela Fahy. Economists predict two more cuts this year as the economy shows signs of stalling.

The number of people behind on payments increased to 480,000 at the end of July, with another 2000 people falling behind in at least one repayment compared with June.

However, even there there were hopeful signs, with a fall in the number of people with the worst arrears who were 90 days or more behind on their repayments.

Monika Lacey, chief operating officer at Centrix, said positive signs in the economy included increased demand for home loans (up 24.4% on demand a year ago), and an increase of 16% in refinancing of home loans, which often indicated borrowers seeking better deals to reduce their interest costs.

Last month, the Reserve Bank Te Pūtea Matua cut the official cash rate (OCR) to 3%, with growing criticism that the central bank was too aggressive for too long in its fight with inflation. It pushed the OCR up to 5.5% in May 2023, and kept it there until July last year.

With 36% of fixed mortgages set to roll-off within the next six months, this could signal relief for these borrowers, Lacey said.

But, she said: “It’s worth remaining cautious around the ongoing uncertainty of New Zealand’s economic recovery.”

The August Household Expectations survey by the Reserve Bank indicated many households felt there was a relatively high chance of them missing a rent, or home loan repayment in the next 12 months.

“As we head into spring, there is no doubt that while some indicators are improving, many Kiwi households and businesses continue to face financial challenges,” she said.

Company liquidations continued to run hot, but that was partly the result of the Inland Revenue Te Tari Taake taking increased enforcement action against companies that had fallen behind in their tax payments months, even years ago.

Company liquidations were up 26% year-on-year with the construction industry remaining the leading industry contributing to these liquidations, with the greatest number being in the struggling construction sector.

A total of 765 construction companies liquidated in the past year, an increase of 46% compared with the previous year

The second worst-hit sector was hospitality with 297 recorded in the past year, an increase of 49% on the prior year.

The rate of company liquidations appeared to be stabilising, Lacey said.