The National Credit Regulator (NCR) released the Consumer Credit Market Report (CCMR) and the Credit Bureau Monitor (CBM) on Wednesday, based on data submitted to the regulator by registered credit providers and credit bureaus.
The latest reports cover credit market information up to June and show the total value of new credit granted increased by 8.25 percent quarter-on-quarter from R121.62 billion to R131.65bn and the number of applications for credit increased by 5.79 percent quarter-on-quarter from 10.49 million in March this year to 11.10 million in June.
Some of the most significant trends observed for the quarter ended June included that the value of new mortgages granted increased by R4.78bn (13.50 percent) quarter-on-quarter and by R3.34bn (9.07 percent) year-on-year, secured credit which is dominated by vehicle finance increased by R61.21 million (0.15 percent) quarter on quarter and by R2.38bn (6.07 percent) year-on-year.
NCR analyst Bongani Gwexe said the biggest take-out from the reports were that more consumers applied for mortgages during the period to finance property purchases despite the country's current economic climate.
Other trends were that credit facilities increased by R1.90bn (11.35 percent) quarter-on-quarter and by R3.30bn (21.56 percent) year-on-year while unsecured credit increased by R2.77bn (11.95 percent) quarter-on-quarter and by R5.94bn (29.58 percent) year-on-year.
Nomsa Motshegare, chief executive at the NCR, said consumers battling with their debt repayments should not despair and are encouraged not to avoid their credit providers but to approach them to assist with payment re-arrangements or to seek counselling.
Motshegare said the debt counselling process was introduced to assist consumers who are over-indebted.
“Such consumers can no longer meet their debt obligation and living expenses with their income. A registered debt counsellor will assist the consumer with budget advice and assist with the debt restructuring on behalf of the consumer,” she said.
Ian Wason, chief executive of Intelligent Debt Management (IDM), said South African households had less money to spend and, as more try to take out credit to get by, the increased living costs and strained national economy impact the affordability of their debt negatively.
“We've seen an increased trend of consumers who already have an average of seven credit agreements (with more than 50 percent thereof being unsecured debt), seeking a consolidation solution so that they can free up cash flow to keep up with the increased living expenses,” said Wason.
He added that, as confirmed by the recent South African Reserve Bank report, the increased VAT from 14 percent to 15 percent combined with the fuel price hikes have placed even more pressure on South African households that have already been turning more to credit just to keep up.
Neil Roets, chief executive of Debt Rescue, said consumers, who collectively owe more than R1.7 trillion in outstanding debt, have reached the end of their tether and the latest fuel price increase is the straw that is going to break the camel’s back.@TheCapeArgus