Alarming rise in defaults

New figures have highlighted an alarming rise in the number of Kiwis defaulting on bills as high interest rates and rising costs bite hard.

The country's largest credit information provider, Veda Advantage said today that in the nine months to September there was an 18 percent increase in the number of bill defaults. The default figures in September were up some 24 percent on the same month a year ago.

Veda said there was a 32 percent increase in the number of telco bill defaults in the first nine months of this year. The total number of defaults had doubled since 2004.

As well as defaulting on commitments, Kiwis are now shying away from new ones, apart from credit card debt.

Veda said that total applications for consumer credit for the nine months to September were down 10.5 percent on the same period in 2007 and had hit a four-year low.

Mortgage applications were down a thumping 17 percent, hitting their lowest level in six years - which was the start of the housing boom.

Applications for hire purchase and other types of credit were similarly affected.

But credit card applications were up 10.5 percent.

Veda Advantage New Zealand Director John Roberts said the overall decline in applications for credit - with the exception of credit cards, reflected the wariness people have of burdening themselves with additional debt in the current climate.

"The fact that we've hit a four year low for credit inquiries is an indication of how far confidence has slipped.

"We are also witnessing increasing numbers of people turning to the revolving lines of credit offered by credit cards as a means of staving off other debts. Default volumes overall are up 18 percent on last year, and the big increase in defaults for the month of September is perhaps a harbinger of what's to come."

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