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Home loan borrowers are keeping up with repayments better than at any time in almost four years, even as a separate group of households falls further behind on other types of debt. Credit bureau Centrix reports that mortgage arrears stood at 1.19% at the end of September, the lowest reading since December 2022. That rate is 13% below where it sat a year earlier, with 19,600 home loan accounts past due.
The improvement holds up when you separate out the longest overdue accounts. Repayments 1 to 29 days late fell 11% year on year on a seasonally adjusted basis, and those 90 days or more behind fell 14%. Both measures point the same way: fewer borrowers are slipping, and fewer are stuck.
Demand for credit is behaving oddly. Mortgage enquiries rose 14.4% on the year in September, credit card demand climbed 9.5%, and motor vehicle loan enquiries lifted 4.7%. Personal loan demand edged up just 1.2%.
Approvals tell a different story. New mortgages approved in September were 16% lower than a year earlier, and total household lending fell 14%. Enquiries measure intent; approvals measure what actually gets signed, and the gap between them has widened.
The Reserve Bank’s credit sector update for September shows housing lending growing at an annual rate of 5.4%, down from 5.5% in August, to reach $404.758 billion. Consumer lending’s annual growth rate held at 2.2%, at $14.636 billion. Mortgage book growth is slowing even as arrears improve, suggesting existing borrowers are consolidating rather than new ones entering.
The share of credit-active consumers in arrears moved up slightly, from 10.74% in August to 10.88% in September. That equates to 430,000 people behind on payments. The total arrears rate is still 9.3% lower than a year ago, but it was up in September.
Within that group, 81,000 consumers are 90 or more days past due, the segment where repayment problems have become entrenched rather than temporary.
Formal financial hardship cases reached 15,300 in October, up 800 from September and 7.8% higher than a year earlier. Consumers aged 35 to 39 record the highest incidence of hardship of any age group. Mortgages account for 38% of reported hardship cases and credit cards for 34%.
Personal loan hardship volumes rose 32% year on year and have more than doubled since 2023, making them the quickest-growing source of hardship. Performance differs sharply depending on who issued the loan: 10.4% of non-bank personal loans were in arrears during September, against 4.6% of those issued by banks. That gap has held for two years.
One encouraging signal appears in the same data. Personal loans between one and 29 days past due fell to 3.1%, from 3.6% a year earlier, the lowest since the end of 2021. Some borrowers have improved their repayment behaviour, even as formal hardship applications keep climbing.
For owners and managers, the split matters more than the headline. Households with mortgages are in better shape than they were a year ago, which supports spending among the group most likely to have discretionary income. Households carrying personal loans, particularly from non-bank lenders, are under more pressure, and hardship in that category is accelerating.
Businesses selling to consumers should expect that divergence to continue. The 35 to 39 age bracket, which carries the heaviest hardship load, is also a core customer group for many small operators. The Financial Services Federation, which represents specialist lenders, notes that some households and businesses remain under real pressure even as the aggregate picture improves.
Centrix describes the recovery as uneven, and the September figures bear that out: arrears down, hardship up, enquiries up, and approvals down.
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