Experian analysis shows New Zealand households under financial strain are most likely to fall seriously behind first on telco and credit card payments, pointing to a shift in repayment priorities as cost-of-living pressure persists.
Data from Experian's Business Pulse Monthly report for April found utilities remained among the most protected household payments even when consumers moved into severe delinquency. Auto loans also ranked among the least likely obligations to slip first, while mortgage prioritisation showed signs of weakening.
The analysis examined which credit products were most likely to enter arrears first when consumers came under stress. It focused on people who held at least two different products, were up to date at the start of a 12-month observation window, and then experienced at least one delinquency during that period.
Among accounts progressing to severe delinquency, defined as 90 days or more past due, telco and credit card obligations were most likely to deteriorate first. The pattern suggests households are making sharper distinctions between essential and non-essential payments when budgets tighten.
Power and water bills stood out as obligations people sought to protect. That remained consistent across the reporting periods examined, indicating access to core household services continued to take priority over other forms of borrowing and recurring bills.
The report also highlighted a notable change in housing-related repayment behaviour. In New Zealand, mortgages became more vulnerable during periods of acute stress, a trend similar to one already observed in Australia.
Repayment order
The findings come as households face continued pressure from living costs and borrowing expenses. The Reserve Bank of New Zealand has warned that higher oil prices and broader cost-of-living strains could further reduce spending power and deepen hardship for borrowers already under pressure.
Experian's methodology, which it calls “First Slip”, uses pairwise comparisons across the different products a consumer holds to identify which type is most likely to move into arrears first. It measures slippage at both 30 days past due and 90 days past due.
That broader lens matters because the study covers more than traditional credit products such as mortgages, loans and cards. It also includes telco and utility accounts, offering a wider view of the trade-offs households make when income no longer covers all outgoing payments.
The New Zealand findings were accompanied by segment-based analysis from Australia, where repayment behaviour differed across household groups. Affluent suburban households were more likely to let their mortgage slip during severe stress, while lower-income, regional and low-skilled households were more likely to fall behind first on credit cards and personal loans.
Although that segmentation was based on Australian data, it offers an indication of how repayment hierarchies may vary by income, geography and household profile. For lenders, utility providers and telecommunications groups, that may affect how they interpret early arrears patterns and which customer groups they flag as at risk.
Louis Tsang, head of analytics consulting and insights at Experian, said the results should be read in context.
“Our analysis suggests some obligations tend to slip earlier than others in severe stress, including telco and credit cards in New Zealand, while utilities appear consistently prioritised in the reporting periods we examined. The broader point is that repayment hierarchies can shift by severity and segment, so early warning and customer engagement approaches are likely to be more effective when they account for those differences,” Tsang said.
The data adds to a broader picture of strain in household finances on both sides of the Tasman. Rising living costs have forced consumers to rebalance budgets, and the order in which bills go unpaid can offer a more detailed signal of stress than headline delinquency figures alone.
For banks and other creditors, a weakening tendency to protect mortgage repayments may attract particular attention because home loans have traditionally ranked among the last obligations borrowers allow to fall behind. A change in that pattern can indicate deeper stress, especially when combined with persistent arrears elsewhere.
At the same time, the continued protection of utility accounts suggests some services retain near-essential status in household budgeting even when finances become severely constrained. Auto loans also appear to receive similar treatment, reflecting the role transport can play in maintaining work and daily life.