Photo: RNZ
Consumer and business credit demand increased in October, a positive sign for the economy, but monthly company liquidations hit their highest level since 2011.
Credit agency Centrix's October monthly report showed consumer arrears continued falling to 459,000, about 12 percent of all borrowers, from 465,000 the monthly before, the lowest level in more than two years.
Chief operation officer Monika Lacey said recent Official Cash Rate (OCR) cuts were beginning to positively reshape the credit environment, a trend she expected would continue after last week's OCR cut.
"New household lending rose 13.2 percent year-on-year and mortgage enquiries remain elevated, as refinancing continues to be popular among borrowers seeking lower rates.
"Consumer credit demand is rising ahead of Black Friday, up 4.8 percent year-on-year, with personal loan demand increasing as the retail sales season ramps up."
In contrast, credit card demand fell by 22.2 percent which Lacy said was due to them becoming less popular with younger consumers.
Business demand rises, but so do liquidations
Business credit demand rose 3 percent year-on-year, which Lacey said signalled steady growth across key sectors.
Credit demand was strongest in the hospitality sector, up 38 percent over the past 12 months, followed by education/training at 22 percent, and retail trade at 19 percent.
Construction remained under pressure, with credit demand falling 11 percent, and transport credit demand fell by 4percent.
Company liquidations rose to their highest level since 2011, which Lacey said underscored ongoing financial stress in some sectors, as well as increased enforcement by the Inland Revenue Department.
Construction had 753 liquidations over the past year, followed by 318 in hospitality, but overall six of 19 industry sectors showed improvements.
Lacey said the numbers had to be taken in context, and the total number of liquidations were only a tiny proportion of the total number of companies in the country.
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