Demand for vehicle finance remained resilient in June despite an overall slowdown in consumer borrowing, as New Zealand households continued to prioritise larger purchases while cutting back on discretionary credit.
The latest Credit Indicator from Centrix shows consumer credit demand fell 5.3% year-on-year in June, reflecting ongoing caution among households despite improving economic conditions and lower interest rates.
Auto loan enquiries rose 8.8% compared with a year earlier, making vehicle finance one of the strongest-performing lending categories alongside mortgages, where enquiries increased 12.5%. Personal loan demand also rose 3.5%.
By contrast, demand for credit cards fell 14.3%, Buy Now Pay Later (BNPL) enquiries dropped 18.7%, and retail energy credit enquiries declined 19.7%.
Centrix chief operating officer Monika Lacey said the data reflected a mixed economic backdrop.
“Household repayment performance continues to improve, with consumer arrears falling to their lowest level in four years and mortgage arrears also moving lower.
“This suggests many borrowers are in a stronger position than they were a year ago, helped by lower mortgage rates and a gradual easing in repayment pressure.”
However, she said financial pressure had not disappeared.
“Credit demand has also weakened, indicating households are still cautious about taking on new debt despite improving repayment trends.
“Larger, purpose-driven borrowing such as home loans and vehicle finance remains more resilient, while demand for credit cards, Buy Now Pay Later and retail energy credit has softened.”
New household lending also lost momentum after a stronger start to 2026.
Approved new mortgage lending fell 2.4% year-on-year in the May quarter, while new non-mortgage lending increased 10.3%, largely driven by secured vehicle lending rather than broader growth across consumer finance products. Overall, new household lending was down 1.5% compared with the same period last year.
The report also points to improving repayment performance among borrowers.
Consumer arrears fell to 10.95% of the credit-active population in May, the lowest level recorded in four years, with the number of consumers behind on repayments falling by 11,000 from the previous month to 432,000. However, 89,000 consumers remain more than 90 days past due, highlighting ongoing financial pressure for some households.
Mortgage arrears also improved, falling to 1.27% in May — the lowest level since September 2023 and 12% lower than a year earlier.
Auto loan arrears remained relatively stable at 5.3%, compared with 5.5% a year ago, while credit card arrears improved to 3.9%, remaining at historically low levels.
On the business side, credit demand eased 2.4% year-on-year, although repayment performance improved with business credit defaults falling 13% over the past 12 months.
The transport sector recorded a 6% decline in credit demand but business credit defaults improved by 14%, while company liquidations in the sector fell 6% year-on-year.
Lacey said the overall picture was one of gradual improvement, although caution remained.
“Overall, June’s data suggests credit conditions are improving for many households and businesses, but confidence remains measured and pockets of financial strain are still evident.”
