New Zealand Consumer Defaults Rise, Credit Applications Fall
New Zealand consumers are making fewer applications for credit and are more likely to default on bills and mortgages as a recession enters its fifth quarter, according to the nation’s biggest credit-checking company.
Applications for personal loans, hire purchases and mortgages fell 12 percent in the six months ended Dec. 31 from a year earlier, Veda Advantage Ltd. said in an e-mailed statement. Mortgage applications alone dropped 20 percent, it said.
Rising unemployment and falling house prices are weighing on confidence and making consumers unwilling to commit to new loans amid a recession that started in the first quarter of last year. The jobless rate may rise to a 10-year high of 7 percent this year from 4.6 percent, the government forecasts.
“Consumers are clearly bracing themselves for the likelihood of greater stress on budgets in 2009,” said John Roberts, managing director of Veda in Auckland bad credit personal loan lenders.
House prices fell 8.3 percent in January from a year earlier, according to government figures. Mortgage applications were at a five-year low in January, Veda said.
“It remains to be seen what impact falling house prices and mortgage-rate cuts will have on the market, but the trends we are witnessing suggest conditions may worsen further before we see any improvement,” said Roberts.
Defaults by consumers on mortgages, personal loans and bills increased 11 percent from the first half of 2008, Veda said.
Defaults by businesses rose 50 percent from a year-earlier, it said.