A new report reveals that despite positive economic indicators, a significant portion of South African credit-active individuals are struggling with loan repayments.
A shocking 43% of the more than 20 million people in South Africa who are credit active are in arrears for more than three months on loans.Although there were various economic highlights in the third quarter, such as more jobs, fewer credit defaults, lower inflation, a repo rate cut, and no more load shedding, South African households are still credit stressed while their finances also weakened in the third quarter.
The latest Credit Stress Report for the third quarter, compiled by Eighty20 and XDS, shows that the number of credit-active individuals continued to increase by 1.4% year-on-year, alongside a modest 1% growth in credit products. The third quarter saw more than 900 000 new entrants to the credit market, signalling expanded access to credit. The total loan balance is now R2.47 trillion, up by roughly R47.6 billion, while credit card balances grew by only 6%. While there has been a significant increase in application volumes for debt counselling over the past four years, there were only 177 000 applications last year in a sector where there are more than 20 million credit-active people, with about 43% of them in arrears on one or more loans. Total overdue balances are sitting at R194 billion (8% of the total outstanding debt), which has grown by a modest R4.7 billion in the year. Credit cards and home loans are the only two loan products that showed significant growth in overdue loan balances, with overdue balances on home loans up 23% and credit cards up 9%. Andrew Fulton, director at Eighty20, says the continuing growth in credit card and retail loan balances, alongside the increase in overdue balances, suggests consumers use these products extensively to cope with financial challenges, such as increasing prices and stagnant salaries. “The data underscores a growing dependence on high-interest, unsecured credit products in a challenging economic environmen
SOUTH AFRICA CREDIT LOAN REPAYMENT DEBT ECONOMY
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