New Zealand in recent years has seen a massive growth in the levels of personal debt.
Thanks to the increase in debt collection corresponding to a strengthening of the housing market, it does not keep money from idling around. Prominent debt collectors this research and shown that since 1993, debt levels were just at $400 billion level and have increased to a whooping $114 Billion. That's a rate of 10% or $100 billion increase in just one year!
The Bank of New Zealand has seen increases in mortgage approval figures, as well as the number of prospective buyers making inquiries. They have estimated an increase in the first annual rise in activity since 2002, after years of decline in 2011. However, internationally known debt collectors are more cautious in predicting 3% of NZ residential growth for 2012, while chief economist for the debt collection, Martin Ellis, explained "Another year of below trend economic growth and the continuing high level of house prices in relation to earnings... "Should housing demand and prevent a renewed bout of high house price increases in 2012", pleasing news for the many first time buyers who are struggling to get onto the first rung of the property ladder.
Consumer unsecured lending over the past year has increased by 9%, which is less than the rate of secured loans. According to Bank of New Zealand, this represents a slight drop in monthly spending levels from October to November. Growing fears about abilities to repay the debts are seen to have been a major problem in most agencies. According to some debt collectors, three in four New Zealanders worry about financial pressures during the festive season with 20% still paying off the debts accrued over Christmas six months later
BNZ has however indicated that overall average consumer lending through credit cards institutions has increased to $4,000 per NZ adult by the end of November 2012. The average NZ household debt was approximately $7,700, mortgages not included, and $46,400, mortgages included, with the average sum owed by each NZ adult at approximately $24,600 each with each loans secured.
Methods of payments in establishments has also seen changes, with debit cards now overtaking credit cards as the most favored card method to account for all payments. The switch to debit cards means that shoppers have discipline on their shopping spree without piling up greater debts from debt collectors. There is still more to be done to reduce unnecessary expenses however, with the average credit card APR at 15%. This is about 11% higher than the expected rate, and much higher than other cards shown from a well-known financial comparison site.
Following on from a history of increasing rates in NZ, with the period from July to September being the worst on record, the recent figures make for welcoming in debt collection. However, the current trend seems to develop towards a more disciplined personal debt from both lenders and borrowers, there is still improvements that need to accomplish in keeping money from idling.
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