SA household debt exceeds R1-trillion
By Regis Nyamakanga
Financial Services Editor
HOUSEHOLD debt in SA had quadrupled to more than R1-trillion in the past five-and-half years, but the growth in consumer credit had started to slow as high interest rates and the National Credit Act (NCA) dampened consumer appetite for credit, National Credit Regulator (NCR) CEO Gabriel Davel said yesterday.
Credit extension to households rose from R289,8bn in 2002 to R1,1-trillion this year. Mortgages accounted for more than 50% of the debt, while other credit classes, including overdrafts, leases, instalment sales and credit cards chalked up the balance.
SA's credit market, which includes business, corporate and household credit extension, is estimated at about R2-trillion. Davel said 300000 overindebted households were saddled with a R30bn debt burden while 1million "debt-stressed" South Africans owed more than R50bn.
Amounts in arrears had continued to swell as high interest rates began to bite but the number of judgments against consumers had remained static as lenders entered into debt rescheduling arrangements with consumers , Davel said.
The NCR had registered 360 debt counsellors since June last year to help over-indebted South Africans reschedule their debts. To date the regulator had received 12000 applications for debt counselling involving about R2,5bn. "We hope to increase the number of debt counsellors to at least 600 by end of this year. We have also established a fund to assist low-income earners pay their debt-counselling costs."
He said the quarterly statutory returns from 3000 registered lenders indicated that credit extension had slowed over the past 12 months owing to the credit act, which was implemented in June last year to crimp irresponsible lending.
Davel would not give statistics on consumer credit for the past 12 months as the sets of returns received from lenders "were not yet at the desired level of quality" expected of them.