Reserve Bank triggers bad loan shock

David Llewellyn-Smith

Tuesday, 4 July 2023

The Reserve Bank of New Zealand has triggered a household loan arrears shock. How bad is it?

Appearance is bad but mainly for the profligate so far:

Other revolving credit arrears are only normalising:

Mortgages are similar:

However, the overall trend to higher arrears is breaking out:

So far it is more post-pandemic normalisation than it is a recessionary crash but the trend suggests that the latter may still come.

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.