Consumer credit demand in New Zealand fell 9% in the year to March, and mortgage applications declined 19%, according to the latest data from credit reporting firm Centrix.

The findings showed credit card approvals were impacted the most since the Credit Contracts and Consumer Finance Act was implemented in December, according to an RNZ report.

The Centrix managing director Keith McLaughlin said the government’s move to relax the rules wouldn’t make an immediate difference.

"Credit providers and lenders out in the marketplace put an awful lot of work into their systems in the lead up to the December changes.

"With the ongoing uncertainty about what the final process may look like ... credit providers aren't making material changes to either their systems or the training they put in their people," he said.

He added that consumer confidence was the largest element impacting New Zealand’s credit landscape, with an overall fall in demand and lending conversions on the cards. Covid uncertainty, rising mortgage rates and mounting inflation had resulted in consumers cutting back on discretionary spending.

Furthermore, data revealed consumer hardship was becoming increasingly evident, with personal loan arrears rising to 7.8% in February, the highest since March 2020, when the first lockdown was implemented.

That said, consumers were able to meet their repayment commitments elsewhere.

"Mortgage arrears are holding up quite nicely ... so I think consumers are tending to maintain their payments on mortgages but other traditional loan-type things are starting to extend out into the arrears," McLaughlin went on to add.

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