In the first quarter of 2025, unsecured credit demand increased by 5.5% year-on-year, with secured credit, including mortgages and auto loans, rising by 4.3%. Notably, mortgage demand grew by 5.2% compared to the same period in 2024, driven largely by consumers seeking better loan terms in anticipation of potential interest rate cuts.
Investor borrowers have been at the forefront of this refinancing wave, accounting for up to 80% of total refinance inquiries in March 2025, a significant increase from around 60% in March 2024. This indicates that investors are now more than twice as likely to refinance compared to owner-occupiers.
However, the data also reveals concerning signs of financial strain. The dollar value of mortgages over 90 days past due has risen sharply, primarily among high-value loans exceeding $1 million. These larger mortgages now exhibit the highest arrears rates across all loan size segments, marking the first time they have outpaced smaller loan cohorts. Arrears on these substantial loans have grown four times faster than other segments over the past two years.
Borrowers aged 31-45 are experiencing the fastest growth in arrears, highlighting the pressure on younger mortgage holders with high debt exposure. Although the number of accounts in 90+ day arrears has remained relatively stable, the total limits in arrears rose to 9.2% in Q1 2025, indicating that distressed borrowers now hold larger average debts than a year ago.
Additionally, credit card arrears jumped by 19.3% year-on-year, with both early- and late-stage delinquencies on the rise. The average limit for accounts over 90 days past due increased to $7,100 in Q1 2025, up from $6,900 a year earlier. While personal loan arrears rates improved slightly due to portfolio expansion, the total limits in arrears surged by 18.7%, with the average delinquent loan at $12,000-a 10% year-on-year increase.
These trends highlight the need for borrowers to carefully assess their financial situations and consider seeking professional advice when contemplating refinancing options. Lenders are also urged to enhance risk monitoring, particularly around high-value mortgage portfolios and unsecured debt, to mitigate potential financial stress among borrowers.
