Here’s how much money the average person in South Africa owes for their car and home

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New data from consumer credit reporting agency TransUnion shows South Africa’s auto finance and home loan markets are both showing signs of recovery amid improving delinquency rates.

Findings from TransUnion’s Q2 2021 South Africa Industry Insights Report cover a period when unemployment was still on the rise, but before the July civil unrest and the peak of the third wave of Covid-19 cases.

The report shows that a number of trends, seen immediately after the Covid-19 outbreak over a year ago, have continued to progress with a few notable exceptions, especially with delinquency, said the group.

Although the overall number of consumers participating in the credit market has not increased significantly from pre-pandemic levels (down year-over-year (year-over-year) in three of the last four quarters and remaining broadly stable year-on-year in Q2 2021 at 0.8%), the total amount borrowed as measured by outstanding balances continued to increase for all major consumer credit products.

“However, as we have seen in previous quarters, it is often for very different reasons depending on the product. Home loans recorded a 15.3% increase in outstandings year-on-year in the second quarter of 2021. This is mainly due to consumers who maintained or improved their income and access to credit and were therefore able to finance home purchases, the rise in housing prices contributing to the increase in new housing. loan balances, ”TransUnion said.

In contrast, overdue credit card balances (up 10.6% year-on-year) were driven by consumers’ need to balance household budgets, maintain liquidity and finance subsistence purchases, especially when income has been negatively affected.

Over the past few quarters, a general increase in delinquencies across most major categories of consumer loans has also contributed to the growth in overdue balances, as missed payments have accumulated and major amounts have remained.
exceptional.

However, in the last quarter, with the exception of personal loans, delinquencies stabilized and decreased. Credit card balance defaults were down 50 basis points (bps) from their high in Q2 2020, and Q2 2021 stood at 12.3%, and were unchanged level than in the second quarter of 2019.

Carmen Williams, Director of Research and Advisory for TransUnion South Africa, said: “Consumer credit market conditions remain volatile and evolving. Any potential impact from recent civil unrest and the spike in Covid-19 cases will not be visible until the third quarter data is released, but in the second quarter there have been noticeable improvements – especially in delinquency. It remains to be seen whether this improvement can be sustained and merits close monitoring in the months to come. “

Vehicle financing

The auto finance market is showing signs of recovery as the start-up growth rate returns to pre-pandemic levels, balances have increased and default rates have improved, TransUnion said.

Origination volumes only fell 3.9% year-on-year in the first quarter of 2021, which is comparable to the year-on-year change observed in the first quarter of 2020: -4.8% while loan volumes new vehicles are returning to pre-pandemic levels. New loan amounts increased 10.8%, indicating that consumers are purchasing more expensive vehicles.

As a result, the overall outstanding automotive financing balances increased 8.6% year-on-year in the second quarter of 2021.

“Refinancing options, low interest rates, the surge in purchasing activity over the past quarter and the shift to more expensive vehicles all contributed to this increase.

“Serious delinquency rates at the account level remained stable at 7.3% in the second quarter of 2021. This stability could be the result of a combination of factors: (as local displacement has opened up) or it could be that after several years of acceleration, delinquencies are now normalized.

Mortgage loan

The home loan market is showing continued signs of recovery as balance growth has increased significantly and defaults have improved, TransUnion said.

Mortgage loan volumes have rebounded since the start of the pandemic (down just 6.2% year-on-year). Mortgages recorded a 15.3% increase in outstandings over one year in the second quarter of 2021.

This is mainly due to consumers who have maintained or improved their income and access to credit and therefore have been able to finance home purchases, with rising house prices contributing to the increase in the amounts of new home loans (up 44 , 0% year-on-year), the credit reporting agency said. .

Serious delinquency rates at the account level (3+ MIA) improved for the first time in two years, down 260bp yoy to 5.1% in the second quarter of 2021. This is likely due to the fact that mortgage lenders have shifted their appetite for risk to reduced appetite for risk. consumers at risk. Compared to the same quarter of last year where 67% of originations concerned first-rate and senior borrowers, in the first quarter of 2021, this proportion rose to 76%.


Read: Cash-strapped South Africans reveal their credit scores


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