South African consumers owe over R2 trillion, of which a tenth is overdue – report
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The Eighty20 Credit Stress Report for the third quarter 2021, compiled in collaboration with credit bureau XDS, shows that the current balance on all consumer loans is just over R2 trillion, with half of that in mortgages, just under a quarter in vehicle finance, and the rest in unsecured loans, credit cards and retail accounts. (The report does not cover the informal “mashonisa” loan market.)
The overdue balance on all loans is almost R200 billion (9.4% of the total balance, compared with 8.8% in Q2), up from R160bn two years ago. The stress in the middle class can be seen in the overdue balance on secured products, which has increased by almost 30% year-on-year.
The highest default rates are in the 18-24 year age group, where three out of five credit active individuals are in default. Default rates are greatest in retail accounts (92% of accounts in default are retail accounts).
Following a year of decreases in the number of accounts that are more than nine months in arrears, the third quarter showed an increase of 325 000 loans in this category. This is cause for concern as these loans represent 80% (R160bn) of the total overdue balance and are unlikely to recover. Unsecured loans and retail accounts make up the bulk of this (85%), and four out of five of the individuals holding these loans earn less than R10 000 a month, says the report.