It’s grim up north as South Island leads the economic recovery: Centrix

Tuesday, 4 November 2025

The South Island was already an easier place for a household to balance the books, but new data from credit reporting company Centrix shows Te Waipounamu continuing to lead the country’s economic recovery.

Centrix collects data on loan repayments by household and business, and its September figures show things are improving when it comes to missed payments on credit contracts, and demand for new credit, including home and personal loans.

“Across the nation there is a clear North and South Island divide,” said Keith McLaughlin, Centrix’s managing director.

“The South Island shows strong credit improvement, driven by lower arrears and renewed lending growth thanks to high confidence in dairy farming and an improving construction and hospitality outlook.”

Wellington was the only region from the North Island Te Ika a Māui in the top 10 of lowest arrears on credit contracts, and it was among the more anaemic regions for economic recovery, Centrix data showed.

Bay of Plenty, Waikato, Auckland, Manawatu and Hawke’s Bay were showing moderate recovery, led by agriculture activity in the rural areas, with construction pipelines picking up in some areas, McLaughlin said.

Northland, Gisborne, Taranaki and Wellington continued to lag, with elevated arrears and business liquidations. Construction and housing markets remain slow in those regions.

About a year out from the next general election, which must be held by December 18 next year, households and businesses were beginning to show signs of life sparked by falling borrowing rates, Centrix data showed.

The continued decline in the Reserve Bank Te Pūtea Matua official cash rate (OCR) was beginning to reshape New Zealand’s credit landscape, providing a much-needed boost to both households and businesses, McLaughlin said.

“This monetary easing is reflected in a notable lift in household lending, with new residential mortgage lending up 21.1% year-on-year,” he said.

A lot of that reflected borrowers switching between banks in search of better deals.

“Borrowers are increasingly refinancing to secure lower rates,” McLaughlin said.

Demand for consumer loans like credit card debt, personal loans, vehicle finance and buy now pay later loans is up by 5.4% compared to September last year.

And the proportion of people behind on one or more credit contract, including loans and power bills, was marginally lower than 12 months ago, though at 12% of all “credit active” people, it remains higher than it was from 2018 to 2023.

In all 465,000 people are behind on at least one payment obligation, Centrix data shows.

And there was one pocket of loan distress that had not improved. There was a slight increase in people behind on their home loan repayments by 90 days or more.

Once someone is behind by three months on their home loans, it can be very hard to catch up again.

The Government has hung its hat on economic growth carrying it through to victory in the next election, but recent polling makes bleak reading for it.

Last month, National fell below 30% in the latest monthly Taxpayers’ Union/Curia poll, which came out shortly after confirmation that the economy contracted by 0.9% in the second quarter of the year.

Should nothing change before the election, a Labour/Green/Te Pāti Māori coalition would be on the cards, however 14% of people were undecided in who they would vote for, so there’s plenty hanging on an economic recovery as the two most important issues for voters were the “cost of living” (26.4%) and the “economy” (7.4%).

“As we see out the final quarter of 2025, the indicator points to some cautiously optimistic signs,” McLaughlin said.

“While some sectors and regions continue to face challenges, the overall improvement in credit demand, arrears, and business defaults is a good step towards confidence gradually returning to New Zealand’s households and businesses.”