More able to repay debt

The national rehabilitation prospects of SA consumers, already in a default position, improved marginally (0.3%) in Q4 2017 versus Q4 2016.

This was found in Transaction Capital Risk Services’ (TCRS) latest Consumer Credit Rehabilitation Index. The index samples over five million consumers in credit default from TCRS’s proprietary database.

The quarterly outlook from Q3 to Q4 2017 showed a 1% improvement. Free State and Mpumalanga continued to record notable deterioration in of -2.5% and -1.2% respectively, year-on-year. However, coastal provinces recorded positive shifts, with the Western Cape improving the most.

“Overall, consumers’ ability to repay debts remained under pressure in Q4 2017, against a backdrop of stagnant employment, escalating costs of household essentials and stubbornly high levels of household debt to income,” Transaction Capital CEO David Hurwitz said.

“… Only a sequence of consistent quarterly improvements would indicate a real change in the consumer outlook. Although the interest rate cut in July 2017 and lower inflation may improve the debt servicing ability of households moderately, the tight fiscus and relentless budget deficit has led to increases in consumer taxes which could put further strain on consumers. We … ultimately believe that a gradual deleveraging of the consumer will prevail.”

At end of 2017, there were 25.08 million credit-active consumers according to Credit Bureau Monitor; 9.87 million had impaired records. – TCRS