Here’s how much money the average South African owes on their car and house right now

 ·12 Dec 2021

New data from consumer credit reporting agency TransUnion shows that South African finances remain under pressure amid record-high unemployment levels and rising inflation.

Originations, a measure of new accounts opened that is a function of both credit demand and supply, increased year-on-year (YoY) across all the major lending categories, except for credit cards.

Home loans recorded the largest percentage increase in originations in the latest data, up 149.6% YoY in Q2 2021.

“This is as much a function of comparison to a weak quarter in 2020 as it is a reflection of increased activity in the market,” TransUnion said.

“In recent quarters, there has been a trend of consumers whose income has been unaffected or even increased during pandemic times entering the housing market as affordability has increased; this trend has continued in the current quarter.”

With the auto market also seeing a recovery, especially for newer used models, vehicle finance also recorded strong originations growth, up 95.8% YoY, the group said.

Vehicle loans

TransUnion’s data shows that the average outstanding balance on a vehicle loan in South Africa is R222,804.

In Q2 2021, the volume of new vehicle loans increase by 95.8% YoY. This is expected as in the comparable period in 2020, level 5 and 4 lockdown restrictions prevented dealerships from operating, TransUnion said. It noted that the current origination volume remains below pre-pandemic levels – down 9% from Q2 2019.

“However, the gap is narrowing; a sign of recovery as demand returns. New loan amounts increased by 8.7% YoY as consumers pay more for vehicles due to ongoing price increases. Serious account-level delinquency rates reduced marginally to 7.1% in Q3 2021 compared to the prior year and across all age bands.”

The stability in delinquencies may result from refinanced deals contributing to higher average balances per account but lower repayment values for consumers leveraging the benefit of a low-interest rate and improvement in risk mix from new originations, TransUnion said.

Home loans

TransUnion’s data shows that the average outstanding balance on a home loan in South Africa is R593,599. The volume of home loans has rebounded since the pandemic began – up 149.6% YoY, the group said.

“The comparative growth is exceptionally high because the deeds office was closed during Q2 2020, creating a backlog of applications which resulted in below-average approvals.

“However, with many industries adopting a hybrid work approach, demand for larger living spaces has risen. Millennials dominate originations from a distribution perspective accounting for 52%, followed by Gen X at 41%.”

One factor that may have contributed is an increased appetite of home loan lenders toward lower risk profile borrowers, TransUnion said.

“Originations to prime and above borrowers in Q2 2021 (78%) is up 15% YoY (63% Q2 2020). Another factor is the increase in refinanced properties, resulting in lower repayment amounts alleviating financial strain on consumers.”

Read: The areas in South Africa where people rely more on grants than salaries

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