Households are increasingly relying on savings to sustain their living standards, depleting the buffers built up during the pandemic. Moneyweb Debt
With interest rates at the highest level in 14 years, households are taking tremendous strain. Some estimates put the increases in car and home loan repayments at an average of 11% and 38% in rand terms respectively in the last 18 months. Nedbank says household debt burdens are at 62% of disposable income, while the “cumulative 475 basis point increase in interest rates since 2021 pushed debt service costs to 8.4% of disposable income from a 16-year low of 6.7% in the final quarter of 2021″.
The numbers are roughly in line with those shared by Capitec on its 20 million customers in April, which showed home loan debit orders up 20% across the year to February, with vehicle finance spend up 15%, and personal loans 12% higher. The profile of an average Nedbank client would be rather different to a Capitec one. Read:Consumers use costly credit to make ends meet – FirstRand Nedbank says the biggest increase in so-called “essential expenditure” has been on groceries, up 16% versus 2022.
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