Rising consumer debt a concern
While the ability of South Africans to service their debt appears to be improving slowly, rapid growth in unsecured lending is potentially worrying as interest rates are expected to go up later this year.
The National Credit Regulator (NCR) has released its Consumer Credit Market report, based on data from registered credit providers from December 2009 to December 2010.
The report shows a 31.97% year-on-year increase in consumer credit granted, while unsecured lending has seen year-on-year growth of 59.78%. The total value of new credit granted increased from R75.14-billion for the quarter ended September 2010 to R83.53-billion for the quarter ended December 2010, an increase of 11.17% when compared to the previous quarter, but 31.97% higher than a year ago.
The number of applications for credit decreased from 6.87-million in September 2010 to 6.72-million in December 2010, representing a decline of 2.28%.
According to the NCR, there are 197000 accounts, with a book value of R107-billion, that are more than 30 days in arrears.
Nomsa Motshegare, the acting CEO of the NCR, said while levels were not at those of December 2007, the regulator was keeping an eagle eye on credit trends.
"Banks are targeting new markets, which is a double-edged sword: we feel it's good that people, especially in rural areas, now have access to credit and loans but such loans are unsecured and expensive.
"What is pleasing is that credit providers have now upped the level of loans they will give unsecured, and using the National Credit Act they can now lend larger sums for longer periods."
The number of consumers' records in good standing is slowly increasing.
"Consumer recourse for over-indebtedness is important. People need to know there is help for them. South Africans owe more than R1.1-trillion in consumer debt," she said.
The NCR has commissioned a study on access to credit and its costs, with the first draft expected next month.
Source: Business Times
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