Credit reporting agency Transunion has published a new report on the credit trends of South Africans, showing how much money we owe on our car, home and store accounts.

Transunion said that demand for credit remains high with outstanding balances increasing across all major credit categories when compared to the same time a year ago.

“Consumers are feeling the effects of weak overall economic indicators, including rising unemployment and slow wage growth, which has put pressure on consumers’ personal finances,” it said.

Home loans

Transunion found that the average South African owes R488 931 on their home loan.

“Home loan originations, as well as the average loan amount to new customers, remained flat YoY (0.5% and 1.7% respectively),” TransUnion said.

“Total account volumes were also flat. As consumers grapple with stretching their finances, large, long term commitments such as purchasing a home, are often delayed, especially in the face of economic uncertainty.”

TransUnion also warned that banks remain uncertain about the possibility of the expropriation of land without compensation, which is believed could have dire consequences on the industry.

“These developments are important to monitor, as president Ramaphosa deliberates structural policy reforms in the coming months,” it said.

Home Loan Metrics Q1 2019 QoQ change YoY change
Number of accounts 1,8M -1,0% -0,3%
Outstanding Balance R885B -1,0% 3,1%
Average Balance (per account) R488 931 0,3% -3,4%
Number of consumers with an active trade 1,9M -15,8% 8,3%
number of consumers carrying a balance 1,8M -16,8% 8,1%
Origination Volumes 49 781 -9,7% 0,5%
Average New Account Loan Amount R736 157 4,9% 1,7%
Account-Level Delinquency Rate (3+ MIA) 4,0% 30 bp 60 bp
Consumer-Level Delinquency Rate (3+ MIA) 4,5% 60 bp 110 bp
Balance-Level Delinquency Rate (3+ MIA) 3,3% -20 bp -70 bp

Vehicle and Asset Finance

Transunion found that the average South African owes R180 962 on their vehicle.

“In Q1 2019, total VAF balances grew YoY at the slowest pace (0.2%) seen in the last two years, as a result of a decrease in originations,” TransUnion said.

“The decline originations could be more than lenders tightening their credit granting criteria; it is likely a result of decreased consumer affordability despite the fact that vehicle prices have declined YoY for both new and used vehicles.”

Given the current economic environment, an increasing number of VAF borrowers are also not meeting balloon payments at the end of their loan terms, TransUnion said.

VAF Metrics Q1 2019 QoQ change YoY change
Number of accounts 2,2M 1,2% -0,8%
Outstanding Balance R405B -2,7% 0,2%
Average Balance (per account) R180 962 1,0% 1,1%
Number of consumers with an active trade 1,92M 1,1% 0,4%
number of consumers carrying a balance 1,89M -1,0% 0,5%
Origination Volumes 142 668 -4,8% -2,5%
Average New Account Loan Amount R301 063 -3,1% 1,7%
Account-Level Delinquency Rate (3+ MIA) 5,2% 20 bp 70 bp
Consumer-Level Delinquency Rate (3+ MIA) 5,7% 10 bp 70 bp
Balance-Level Delinquency Rate (3+ MIA) 4,1% 60 bp 110 bp

Clothing accounts

Transunion found that the average South African owes R2 087 on their clothing account.

“In 2018, clothing retailers lobbied against the 2015 NCA regulation which required proof of income documentation in order to perform affordability assessments – retailers were the hardest hit by this regulation and suffered a significant decrease in credit granted volumes,” TransUnion said.

“In 2018, the court ruled in the retail industry’s favour and lifted this stipulation, and credit providers reverted back to internal assessment processes. In essence, the retail industry was reset, resulting in volatile YoY comparisons.”

Clothing Account Metrics Q1 2019 QoQ change YoY change
Number of accounts 17,3M 5,0% 8,7%
Outstanding Balance R36,0B 0,8% 0,7%
Total Credit Lines R94,0B 6,5% 5,3%
Average Balance (per account) R2 087 -4,0% -7,3%
Average Credit Line (per account) R5 443 1,5% -3,1%
Number of consumers with an active trade 10,7M 4,3% 9,7%
number of consumers carrying a balance 9,8M 1,7% 7,3%
Origination Volumes 929 747 -0,6% 21,6%
Average New Account Credit Line R3 067 -8,7% 3,3%
Account-Level Delinquency Rate (3+ MIA) 26,1% -50 bp -100 bp
Consumer-Level Delinquency Rate (3+ MIA) 16,8% -250 bp 20 bp
Balance-Level Delinquency Rate (3+ MIA) 32,6% 110 bp -20 bp

Source: BusinessTech