Photo: RNZ
More New Zealanders are falling behind on their home loans - but a change in bank attitudes may be stopping them from having to go to mortgagee sales.
The latest Centrix data shows mortgage arrears up 7 percent in the year to December, at 1.5 percent of mortgage lending, compared to 1.41 percent in November.
The data showed that there are now 22,100 mortgages that have payments that are past due, 1100 more than in November.
The number of reported hardships was also up 19 percent year-on-year, and nearly half of them were related to problems with mortgage repayments.
Centrix managing director Keith McLaughlin said, despite that, the numbers did not seem to be getting significantly worse.
In 2020, the number of home loans in arrears was 1.49 percent, and in 2019 it was 1.51 percent. In 2017, it was 1.55 percent. It dropped away during the period of record low interest rates through the pandemic, to less than 1 percent, but started climbing again through 2023.
"It's been sitting around that level for the last 12 months," McLaughlin said.
"What we are seeing is households are manging their finances better, arrears have stabilised."
He said the growth in reported hardships reflected more activity from lenders speaking to borrowers who were having problems with their repayments.
"That prevented the mortgagee sales we might have seen in the past.
"There have been very few mortgagee sales reported over the last couple of years relative to the number of accounts that have gone into arrears."
He said that was a sign of strong communication between lenders and borrowers.
"Banks don't want to go to mortgagee sale. If they can restructure it or get the repayment deferred, or even encourage the borrower to put it on the market themselves, rather than put it through mortgagee sale. There's a lot more communication and negotiation around that."
He said households had also clearly been willing to cut back on discretionary spending to get through the period of tighter interest rates.
NZ Banking Association chief executive Roger Beaumont said banks worked closely with customers in financial hardship.
"A mortgagee sale is usually a last resort and suggests other options are no longer available. Mortgagee sales remain extremely low, despite the economic climate."
Kelvin Davidson, chief property economist at CoreLogic, cautioned against thinking mortgagee sales numbers had peaked for this cycle.
"After all, we're probably going to see unemployment rise a bit further yet.
"But at the same time, they're still very low compared to past cycles - about 200 over the past year, versus more than 2500 during worst times post-GFC, and of course lower mortgage rates will tend to limit any further pain.
"I think the smaller cycle is due to different attitudes from both borrowers and banks, as well as increased loan scrutiny over time, which has prevented some potentially risky loans from even being approved in the first place."
A spokesperson for Fincap, the national network of financial mentors, said there had been an increase in the number of people seeking help while dealing with mortgage stress.
"The proportion of people presenting with a home loan has increased steadily in since 2021."
He said although interest rates were falling, people often presented to a mentor only once they had tried everything they could think of.
"This is usually months or even years after first facing difficulty with their finances."
