The number of New Zealanders facing financial hardship continues to climb as credit-lending data suggests hospitality businesses are now more than twice as likely to fail as compared to other businesses.

The proportion of mortgages in distress also increased between January and February.

The latest report from government credit agency Centrix says there are reasons to be cautiously optimistic.

There were “reasons to be cautiously optimistic” but “uncertainty” remained the defining characteristic for the economy, according to credit bureau Centrix’s data.

The reporting agency’s managing director Keith McLaughlin said a “mixed picture” had emerged for Kiwi households and businesses in January and February data.

“There are reasons to be cautiously optimistic with overall arrears showing signs of improvement. The number of people behind on their payments has fallen back to 457,000 — down 23,000 month-on-month,” he said.

1News business correspondent Katie Bradford speaks about the GDP figures and a big report into the banking sector.

“Although this improvement was expected following the seasonal uptick of late payers in January, demand for credit was also up 3% compared to the same period last year, buoyed by higher volumes of applications for unsecured credit.”

However, the current debt arrears level was still 8.1% higher year-on-year — tracking closely to 2018 levels after coming off historic lows in 2020 and 2021.

Financial hardship figures had also grown month-on-month since November 2022.

In February, around 12,500 accounts were reporting financial hardship – up 300 from January. Year-on-year, the number of financial hardship accounts were up by 27%, and 44% of hardships relate to “mortgage payment difficulties”.

Aotearoa’s economy has been in a technical recession for the past two quarters.

More than 22,000 mortgages now overdue

The number of residential mortgages with overdue payments has also been on the rise, with an increase of more than 800 between January and February.

The reported increase to 1.51% in February, from 1.47% in January 2024 — brought figures to the highest reported level since January 2020, according to Centrix.

There were 22,600 mortgage accounts past due, up 18% year-on-year.

Alongside rising mortgage arrears, non-performing home loans have “risen sharply” over the last three months. Non-performing home loans were mortgages where the payment from the borrower was at least 90 days past due or judged to be “impaired”.

Year-on-year the number of non-performing home loans were up by 44%.

NZ hospitality hit by economic woes

Meanwhile, hospitality businesses were more than two times more likely to fail than other businesses, according to data from the past year.

McLaughlin said: “Pubs, bars, restaurants and cafés are at most risk as weak customer demand, rising costs and ongoing staff shortages pinch.

It comes after a bounce back for the industry, built largely on increased spending at cafes and restaurants after Covid lockdowns.

“This equates to hospitality businesses being more than two times more likely to fail than other typical New Zealand businesses.

“Overall business defaults and liquidations remain up year-on-year, hitting retail trade, construction, transportation, property/rental and hospitality the hardest.”

In February 2024, 17 hospitality businesses filed for liquidation compared to 12 liquidations the month before.