Centrix’s latest Credit Indicator report revealed the proportion of home loans in arrears climbed to 1.29 per cent, up from 1.25 per cent in September.
There are 19,200 mortgage accounts past due in October, up 25 per cent year-on-year.
"As loans continue to be refinanced with higher interest rates due to the current economic climate, this activity could continue well into 2024," Centrix managing director Keith McLaughlin said.
Homeowners under pressure are unlikely to find relief in lower interest rates any time soon after the Reserve Bank’s official cash rate (OCR) announcement on Wednesday which forecast rates would need to stay higher for longer.
Cuts to the OCR could now be on the table from mid-2025.
"The recent OCR announcement will no doubt be disappointing for some households who would have been hoping for an indication of interest rate cuts next year to help relieve some financial pressure," McLaughlin said.
Mortgage arrears had been dropping from a year-high of 1.32 per cent in May. At the time that was the highest level reported since March 2020 (1.49 per cent), albeit still below historical highs.
Retail sales also drove a rise in consumer credit, in line with seasonal trends, with demand up 8 per cent year-on-year in November.
Demand for credit cards rose 11.8 per cent year-on-year.
"We’ve seen credit card, Buy Now Pay Later (BNPL) and personal loan demand all rising in November. Credit demand has a seasonal peak in November in the lead-up to Black Friday sales and the holiday season," McLaughlin said.
It comes with a warning, however, to be mindful of stretching finances beyond your means, McLaughlin said.
"It’s this time of year where people can easily fall into debt traps as they try to make ends meet in the lead-up to the Christmas and the New Year period."
McLaughlin said the consequences of not meeting repayment obligations could include an individual’s credit score being negatively affected for years, impacting financial decisions in the future.
Alongside increased demand, arrears for personal and vehicle loans, and credit cards also continued to climb.
Consumer arrears rose to 11.78 per cent (431,000 people) of the credit active population in October behind on their payments, compared with 11.70 per cent in the prior month.
The current arrears level is up 6.1 per cent year-on-year, which is tracking closely to levels seen in 2018 after coming off historic lows during the Covid-19 years.
Personal loan arrears climbed 9.5 per cent in October, increasing for the fourth consecutive month.
Credit card arrears rose 4.4 per cent in October when compared with September and were up 8 per cent year-on-year.
Vehicle loan arrears climbed 5.8 per cent monthly and were 19 per cent higher year-on-year.
Company liquidations also remain high as businesses struggle with the current economic climate, Centrix said.
Liquidations are up 36 per cent year-on-year in October, but down from the 40 per cent year-on-year rise recorded in September.
Notably, liquidations for retail companies rose 73 per cent year-on-year as "the bite of reduced spending continues to hit the pockets of businesses across the country," the report said.
"Business credit defaults, liquidations and closures are always tough. It’s imperative business owners get into the habit of credit checking potential customers, business partners and suppliers to ensure they aren’t unknowingly extending funds to entities with bad credit risk," McLaughlin said.