By Ina Opperman
The latest credit stress report confirms that borrowing money to pay debts has become a lifeline for millions of South Africans, leaving them stuck in a debt spiral.
Disturbing results from the latest Eighty20/XDS Credit Stress Report for the fourth quarter of 2022 show an increasing appetite for credit among customers, with more than 800000 new entrants into the credit market, the highest since the Covid pandemic.
This figure came with a surging number of loans, notably credit card, vehicle financing and home loans newly in default. The previous year this number was 600000, signaling a deepening debt spiral among more than 18 million consumers, over one third of the population.
It is even more worrying that these new entrants took out over R9.3 billion in new loan value, the highest in more than two years and nearly 10% more than the year before.
There has also been a significant surge in credit card balances, which increased by R25 billion (12%) year on year, bringing the total credit active population to 18.7 million with total loan balances of a whopping R2.3 trillion.
“These statistics show South Africans are increasingly turning to credit to survive the relentless onslaught of cost-of-living increases that seemingly have no end in sight,” says Neil Roets, chief executive of Debt Rescue.
The news from Statistics SA that annual consumer price inflation shot up to seven percent in February from 6.9% in January due to food price inflation is devastating.