KPMG says that finance companies' losses from bad debts are on the rise due to households' increasing difficulty in making repayments. The KPMG survey included Esanda, CBFC, Capital Finance and companies associated with car financing.
KPMG partner Peter Nash said that while repaying debt is of little concern while rates are low, an increase in interest rates or factors such as unemployment could trigger problems. The consumer credit market will be the first to feel the effects of a downturn, Nash said. Credit cards and finance for consumer goods are leading indicators because households will make repaying their mortgage loans the first priority when they start facing difficulties.