Another report has confirmed that South African consumers are living on credit to survive the cost-of-living crisis. 📈 Economy
The festive season and back-to-school rush boosted clothing account originations, making them surge by 59.6% compared to 2021, pushing volumes above pre-pandemic levels. However, in this case credit limits also decreased as volumes increased 9.0% compared to the year before, primarily with younger and riskier borrowers.
Overall outstanding balances increased by 11.2% and average balances grew by 5.7%. Millennials accounted for 50% of bank personal loan originations. Non-bank personal loan volumes also increased by 24.7%, with the average new loan amount increasing by 3.8% compared to 2021. Growth was driven primarily by the upper end of the market, with significant growth in sales of properties valued at R3 million and above as buyers in this segment are generally less sensitive to rate hikes, Sun says.
“The repo rate increased six times in 2022, resulting in a 325 basis points increase on debt. Additional disruptions to macroeconomic recovery, such as the energy crisis and the war in Ukraine contributed to the continued inflationary pressure hindering debt affordability and serviceability for many consumers.”
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