SA consumers in R1.63tn debt

SOUTH Africans owed financial institutions R1.63-trillion in the second quarter –a 0.9% increase compared with what they owed in the first quarter‚ a National Credit Regulator (NCR) report showed yesterday.

This highlights the high dependence of South Africans on debt.

Job losses and an economic contraction in the second quarter could also have played a role in people depending more on debt.

Consumers should continue exercising caution‚ live within their financial means‚ and borrow respons NCR CEO Nomsa Motshegare advised.

Mortgage bonds accounted for the largest share of debt at R857-billion‚ followed by asset-backed credit, such as car loans, at R357-billion.

Data showed that unsecured loans grew at a slow pace – again indicating that financial institutions are more reluctant to grant loans that are not backed by any assets.

The slower growth in unsecured lending also indicates tighter lending criteria by lenders.

The NCR said the total value of new credit granted increased from R108billion in the first quarter to R112billion in the second quarter.

While the number of applications for credit soared by 16.8% in the second quarter‚ the rejection rate was at an even higher 56% – again indicating more cautious lending by financial institutions.

Banks had the largest share of total credit granted‚ followed by retailers‚ non-bank financiers and “other” credit providers.

The number of credit-active consumers increased by 1.1% to 23.37 million in the second quarter. — BDlive