Vehicle loans feel squeeze

The demand for vehicle loans has increased but so have arrears on such deals, according to the latest credit indicator report from Centrix.

The company says consumer credit demand began 2026 on a strong note and was up 9.4 per cent year-on-year, which was driven by heightened borrowing over the holiday period.

There was strong growth in mortgage applications and personal loans, which rose 27 per cent and 15.5 per cent respectively. Demand for automotive borrowing climbed 2.7 per cent over the same period.

Meanwhile, consumer arrears increased modestly in December “in line with normal seasonal patterns”. 

Centrix notes 12.1 per cent of the credit-active population were behind on payments. This figure was up on November’s 11.9 per cent but down 0.8 per cent year-on-year.

The number of consumers in arrears rose to 471,000, while those 90-plus days past due stood at 87,000, “reflecting typical summer pressures on household cash flows and a lagged effect from the economic conditions of last year”.

Vehicle loan arrears increased to 5.8 per cent of all active loans, after rising six per cent from the level a year ago.

Mortgage debts nudged up to 1.4 per cent and credit card arrears grew slightly to four per cent.

Monika Lacey, Centrix’s chief operating officer, says households and businesses are hoping for sustained economic recovery in 2026 after a challenging few years.

While consumer credit demand grew, she adds trends for late payments were mixed heading into the new year. 

“Overall consumer arrears rose seasonally to 12.1 per cent in December but remain lower than a year ago and broadly in line with 2023 levels,” she explains.

However, Lacey notes the increase for vehicle loan arrears indicates “mounting pressure for some households”.