Recent data from Eighy20 shows that middle class South Africans are under major financial strain.
South Africa’s middle class is spending money they do not have, turning to credit to fund their lifestyles while increasingly defaulting on their loans.
Despite this, retail sale activity showed surprising resilience in the fourth quarter. The largest contribution towards this increase came from retailers in textiles, clothing, footwear and leather goods. Another major headache for the category of consumers is that they are struggling to meet growing instalments on big loans such as vehicle asset financing and home loans – as a direct result of rising interest rates.Eighty20 noted that the middle class is still not as reliant on credit as the mass market group, which earns between R3,000 and R8,000 a month.
Despite almost no growth in Vehicle and Asset Finance and home loan balances, the fourth quarter saw high year-on-year increases in the rates of new defaults for these loan types – 30% and 18%, respectively, the group said.
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