Credit bureau Centrix says there’s been a 10% increase in the number of households in hardship since the end of the Reserve Bank’s mortgage deferral scheme

Credit bureau Centrix says there’s been a big surge in the number of households in financial hardship.
In its latest monthly outlook looking at April, Centrix says the surge has followed the ending of the Reserve Bank’s mortgage deferral scheme in March.
The scheme, originally intended for six months as a reaction to the Covid crisis, was extended out to 12 months. At peak about $20 billion worth of borrowing among 60,000 personal customers was on full deferral, but most of those on deferral had gone back to full payments well before the scheme ended.
Centrix managing director Keith McLaughlin says there’s been a 10% increase in the number of households in hardship since the scheme ended.
There are now 11,900 mortgage accounts flagged as requiring Financial Hardship Assistance, compared with 10,800 a month earlier.
“…The ending of the Reserve Banks mortgage deferral scheme might result in increasing numbers forced to sell their homes, McLaughlin said.
“…While the numbers are still small, we anticipate this to increase further in the coming weeks as more households struggle to meet their mortgage payments and fall into arrears.”
McLaughlin says although he knows banks are doing everything they can and working hard to support customers, “these households are going to need to make some hard decisions if they cannot take steps to meet their mortgage obligations”.
The hardship being suffered for some comes at a time when other people have be clambering into mortgages in huge numbers.
Records were shattered once again in March, according the most recent Reserve Bank figures, with $10.487 billion advanced in mortgages.
And McLaughlin says April saw mortgage applications “at 20% above our baseline”.
He says that credit demand continues to remain strong “across all sectors”.
“This strength speaks to the recovery that has occurred following the collapse in the credit market this time last year when the country went into Level 4 lockdown.”
Overall credit demand in April was back to 94% of pre-Covid figures, McLaughlin says.
“Credit is a leading indicator of confidence. People borrow when they feel confident that they can meet future repayment obligations. The strength of the credit market shows that, despite the challenges of the past 12 months, we are seeing a return of confidence and stability.”