Stuff
Often people can be helped to get on top of their money problems without having to empty their KiwiSaver accounts.
More than 400,000 people ended last year behind in their repayments on loans, power bills and other credit contracts, data from credit reporting company Centrix shows.
There were 17,200 households behind on their home loans.
Centrix chief executive Keith McLaughlin said people behind on their payments represented just over 11% of the “active credit population”.
The number of people who were behind on payments in December was 10% higher than in December the previous year, which McLaughlin said was a result of deteriorating economic conditions.
“You can’t put up interest rates, and have inflation of 7.2%, without affecting households,” McLaughlin said.
READ MORE:
* Average home loan drops $25,000 in line with house price falls
* About 400,000 borrowers behind on a loan payment after 5% rise in arrears
* Tough times bite with more borrowers missing payments on their loans
But even as the number of families behind on their loans is rising, charities that help people get on top of their debts are facing some of their government funding coming to an end in June.
Ngā Tangata Finance chief executive Natalie Vincent, and Christine Liggins, chief executive of Debtfix, both said funding would end in June.
Liggins said the end of funding was an “absolute disaster”.
Ministry of Social Development safe, strong families and communities general manager Mark Henderson said the funding for debt solutions that was coming to an end was provided through the Covid Response and Recovery Fund in Budget 2020.
“In Budget 2022 this funding was extended for another year, up to 30 June 2023,” he said.
The ministry conducted a review of debt solution services, which was positive, but the report on their work has not been made public.
“We’ve been very satisfied with their work,” Henderson said.
“Decisions have not yet been made about funding these services beyond June 2023. We will continue to provide updates as they become available.”
Social Development and Employment Minister Carmel Sepuloni said the funding was time limited and was under consideration.
Vincent said without government support “all of us will struggle to deliver our services.”
Ngā Tangata Microfinance makes no interest loans to struggling families, and then works with them to help them get debt-free.
“In 2022 the average interest rate our Ngā Tangata clients presented with was 37%,” she said.
“New Zealander’s are being battered from all directions. Many are barely coping. Post-Christmas is historically a time of year when we would see an increase in the level of financial stress and the need for our support, but already this year the need is unprecedented,” she said.
Centrix’ data showed loan arrears were at a 3-year high, and financial hardship cases were on the rise, she said.
Vincent said the Government was right to make the current cost of lliving pressure its “absolute priority” in the coming months, and urged it to invest back the debt solutions charities.
“Our loans absolutely make a positive, measurable difference, helping those in severe hardship to reduce high cost debt, access financial mentors and learn how to get ahead with their money,” Vincent said.
“Greater long-term investment is needed in this sector urgently and immediately,” she said.
