Johannesburg - Property insolvencies continued to rise in early 2014, FNB said on Tuesday.
“Total insolvencies for the three months to February rose year-on-year by 4.08 percent,” the bank's household and property sector strategist John Loos said in a statement.
In February the number of insolvencies rose by 4.46 percent, less than in January, when insolvencies rose by 14 percent compared to the same period last year.
“However, on a monthly basis, the numbers can be volatile,” said Loos.
While there was a “considerable period” of improvement in insolvencies through much of 2012 and 2013, it appeared there was now a rise in people unable to pay their property debts.
“We do indeed anticipate further near-term deterioration (rise) in insolvencies levels, caused by recently slowing disposable income growth in line with a multi-year slowdown in economic growth, combined with gradually rising interest rates.”
This month, Momentum head of financial wellness Estelle Scholtz-Mare assessed that the appetite for debt among South Africans had grown even stronger amid low interest rates for the past five years.
“South Africans are still paying 76 percent of their income on debt repayment, which does not augur well for savings,” she said in a statement at the time.
She said people had become dependent on expensive personal loans to fund their lifestyles.
The demand for personal loans skyrocketed after banks tightened their lending practices after the 2008 credit crunch.
Scholtz-Mare said at the time that according to statistics from the National Credit Regulator almost R160 billion in unsecured credit was outstanding.
Of this 24 percent of the loans were in arrears for 30 days or more and 16 percent of borrowers had missed payments for 90 days or more. - Sapa