SA DEBT ALARM BELLS RING OUT
DESPITE SA enjoying the lowest interest rate in decades, more and more consumers are faced with spiralling debt.
The National Credit Regulator (NCR) issued its Consumer Credit Market and Credit Bureau Monitor reports recently which painted a bleak picture. The reports are based on data submitted to the regulator by registered credit providers and credit bureaus.
Nomsa Motshegare, chief executive of the NCR, said the latest statistics for the quarter ending June show a continued deterioration in the financial health of consumers. The number of consumers with impaired records increased by 0.6 percent quarter-onquarter.
Debt Busters managing director Luke Hirst said there was a definite increase in the amount of applications from consumers for credit and that the second quarter of the year was one of the worst for people in arrears with payments.
It was unlikely that the coming months would improve for consumers as the grain and soya situation in the USwould have a huge impact on food prices and overdrafts were increasing at a phenomenal rate, he said.
Hirst said in the unsecured market such as credit cards and store cards, much more credit was being granted to those earning salaries of over R15 000 than lower earners due to factors such as poor credit records.
“The cost of living is increasing more for those [consumers] than it is for someone who is wealthy. Consumers have to start adding up the rands and cents and writing down where their money is going,” said Hirst.
Consumers should start saving now so that they don’t have to take out credit over the festive season, Hirst said.
The latest edition of the Consumer Credit Market report covers credit market information from June 2011 to June this year and the Credit Bureau Monitor reflects trends in credit and financial performance of consumers and accounts which include utilities, cellular contracts and insurance premiums. The reports showed some worrying figures.
Total outstanding consumer credit balances for June 2012 amounted to R1.36 trillion, representing a quarter- on- quarter growth of 3.22 percent and a year- on- year growth of 11.14 percent.
Consumers classified in “good standing” decreased by 60 000, to 10.38 million. This reflects a percentage decrease of 0.6 percent quarteron- quarter and 0.3 percent year-on-year in proportion to the total number of credit-active consumers in good standing.
The number of consumers with impaired records increased by 170 000 to 9.22 million, from 9.05 million in the previous quarter.
Secured credit, which is dominated by vehicle finance, increased from R31.62 billion for March 2012 to R33.03bn for June this year, a quarter- on- quarter increase of 4.49 percent.
Unsecured credit increased from R21.95bn for March 2012 to R25.80bn for June 2012, a quarter-onquarter rise of 17.55 percent.
The value of new unsecured credit granted increased by 17.55 percent when compared with the previous quarter and increased by 36.12 percent when compared with the same peri- od a year ago.
Applications for credit increased from 9.16 million in March 2012 to 9.77 million in June.
The value of new mortgages granted increased by 9.69 percent quarter-on-quarter from R24. 56 billion to R26.94bn.
Credit facilities which mainly consist of credit cards, store cards and bank overdrafts increased by 12.95 percent quarter-on-quarter from R15.95bn to R17.27bn.
Short-term credit showed a quarter-on-quarter decrease of 5.27 percent from R1.61bn to R1.53bn.