Bank Customers Resilient In The Face Of Economic Headwinds

Bank customers are managing their money relatively well in the current economic conditions according to retail banking insights released today by the New Zealand Banking Association.

The insights from January to June this year showed customers continued to use credit cards prudently and were maintaining home loan repayments.

Of the 2.23 million customers who had a credit card, who had an average monthly card spend of $2,072, 67.2% paid off their monthly balance in full without incurring any interest cost, up 0.6% compared to the previous six months.

Of the 1.38 million home loans across 1.14 million customers, the average loan value was $318,151. The average home loan value for first home buyers was $472,361. Only 1.4% of home loan customers were behind on their repayments, while 39.7% were paying more than their minimum repayments – down slightly from 41.4% in the previous period.

13,095 home loans switched from principal and interest payments to interest-only, down 6.9% from the previous period.

New Zealand Banking Association chief executive Roger Beaumont says: “We know that some people are experiencing financial difficulty in the current economic conditions. These insights provide a wider picture that shows, despite these headwinds, the vast majority of New Zealanders are managing their financial situation well.”

There are 9.86 million unique banking customers. Of those, 9,267 customers applied for hardship status, up 1% from the last period. 5,968 customers were granted hardship status, up 6.9%.

“Savers continued to make the most of raised interest rates from January to June, with the average interest rate on term deposits sitting at 6.1%. That will now likely decline with the Reserve Bank moving in August to start reducing the official cash rate. The next OCR update due on Wednesday is also widely expected to bring a further decrease,” says Beaumont. The average interest rate on savings accounts in the period was 3.8%.

The value of term deposits increased by 6.6% to $183 billion, with an average balance $107,800.

The full set of retail banking insights for January to June 2024 is available here: https://www.nzba.org.nz/wp-content/uploads/2024/10/Retail-banking-insights-January-to-June-2024.pdf

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