Keith McLaughlin: Centrix Managing Director on the rising consumer arrears and financial hardship

Centrix is keeping positive despite rising financial hardship and almost half a million Kiwis behind on loan repayments.

The credit reporting agency's latest Credit Indicator report shows consumer arrears are 1.3% higher year on year, with financial hardship up 19%.

But Managing Director Keith McLaughlin told Mike Hosking the figures are seasonal and have been impacted by Christmas and the school new year for the last 15 years.

He doubts this is worth reading too much into, and trends show households have things under control.

McLaughlin says the situation is better than last year.

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Episode Transcript

Speaker 1 (00:00):
More insight into the state of New Zealand in financial hardships.
Up here is your headline nineteen percent year on year,
So that seems a lot, but is it. This is
Centrics Dart and nearly half of the cases of mortgage
show related. Centrics Managing director Keith McLaughlin back, Well, there's Keith.
Morning to you.

Speaker 2 (00:13):
Good morning, Michel.

Speaker 1 (00:13):
So I'm trying to paint a positive picture here. So
four hundred and seventy thousand people are behind on payments,
but that's only up six thousand, not that many. Consumer
areas one point three percent higher, Not that many personal
loans rose to nine point two percent, up from eight
point one not that many. Am I being overly optimistic
or not?

Speaker 2 (00:30):
Now? I don't think you are at all, Mike. I
think what we find at the moment is that there
is a seasonal increase in areas, which has been in
place for for the last fifteen years December January February.
We always find that areas move up because other expenses
take some other household budget. So look, I think it
is a seasonal thing, and I don't think there's needhing

(00:51):
to read into that. But when you look across the trend.
I think households has got their budgets under control, and
I think that you know, seems are looking a lot
bitter than though certainly did twelve months ago.

Speaker 1 (01:02):
Good And so will we flush through the Christmas season
and we got the numbers or is there a February
or something like that still to come well?

Speaker 2 (01:09):
I think it's from an Arare's perspective, certainty February through
the probably thinking to March it's quite tight. I think
people spin it up a little bit over Christmas. I
think there's back to school expenses, so there is always
a bit of a tidy economy ability to repay over
the December, January, February months, March starts to pick up,
and we traditionally find that areas do drop away during

(01:30):
the winter period because it discretion, the spinning falls away,
and people focus on paying off their debts.

Speaker 1 (01:36):
So this business and mortgage areas, it's increased to twenty
two one hundred people. Am I also write or overly
optimistic in saying twenty two thousand people out of a
population of five million, isn't actually a lot of people
in trouble?

Speaker 2 (01:48):
No, it's not. And I think when you also factor
into that that there are hardship cases out there, which
is where people are talking to the lenders to say, look,
I'm struggling, can we work through this. I don't think
that we're in a grim situation at all. I think,
you know the certainly households are struggling more than others.
There are a lot of household and it'd either have
very little or no mortgages who are lacking confidence to

(02:12):
go out and spend money, which is impacting small businesses.
But I think generally the economy is tracking towards an improvement.

Speaker 1 (02:19):
I'm encouraged to hear that as far as businesses are concerned,
all those liquidations and receiverships we saw before Christmas, do
you have any read on that? What is that there
are more where that came from or not years.

Speaker 2 (02:30):
Look, I think that's the beginning of a bit of
a wave. Discretionally spending fell away certainly during the course
of last year, because households just didn't have the money,
or if they did have it, they weren't prepared to
spend it at that stage. I took a conservative approach,
and I think the small to medium businesses who didn't
have the reserves in place didn't have the revenue coming
across the counter, and her expenses kept going up and

(02:52):
they really struggled. I think coupled with that as the
Inland Revenue Department took a softly approach over the last
two to three years and they are reversing the action
and they are now quite active and winding up companies
that probably should be wound up anyway.

Speaker 1 (03:07):
So you've given us a bit of positive, you've given
us a bit of negative. Where does that leave the
Reserve Bank on the nineteenth of February to go twenty
five or fifty or that's out of your wheelhouse.

Speaker 2 (03:15):
There's a way on my wheelhouse. I'm not the economist,
so I'd like to see OUs as much money different
house of budgets as possible so that we can get
economy stimulated again.

Speaker 1 (03:23):
Good stuff, Keith, Nice to talk to you is always
Keith McLoughlin's Centrice Managing Director. For more from the Mic
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