Crisis hits South African homeowners as debt starts to choke

New data by credit bureau, Compuscan, shows that even wealthy South Africans are struggling to keep up with their mortgage repayments.

Citing the latest information on consumer credit behaviour for Q2 2016, Compuscan said that the number of mortgages accounts with adverse enforcements listed on them increased by 26% from quarter to quarter.

Compuscan noted that even those accounts with mortgages of R3 million and above had been missing payments.

“In the first quarter of the year, we noted that consumers were struggling to keep up with their vehicle and asset finance loan repayments. The fact that the seconds quarter’s data indicated that consumers were struggling to make their mortgage payments is extremely concerning,” said Jacobus Eksteen, a senior data analyst at Compuscan.

“On the whole, consumers tend to prioritise their mortgage payments as this type of debt is usually taken very seriously by consumers. They have a lot more to lose if they don’t make payments on this type of account, so the trends we’ve seen in our data leads us to believe that consumers have really been feeling burdened financially.”

The number of mortgages that had been subject to adverse enforcements increased from 18,500 to 23,300, from Q1 2016 to Q2 2016. The bureau’s data also indicated that the number of mortgages that were three or more months in arrears increased by 7% from quarter to quarter.

Read: Data suggests SA lenders have tightened up on R1 million car loans

While many consumers across the board seem to be in tougher financial positions than preceding months, consumers in lower income groups understandably feel the pinch the hardest.

According to Compuscan’s data, approximately 39% of mortgages to the value of R300,000 or less had been subject to adverse enforcements as at the end of Q2 2016.

Adverse accounts: mortgages

Mortgage balance
% of adverse enforcements
Less than or up to R300 000 38.93%
R300 001 – R500 000 24.25%
R500 001 – R999 999 26.38%
R1 million – R3 million 10.01%
R3 million+ 0.43%

Considering the vehicle and asset finance (VAF) loans listed on the bureau, Compuscan previously reported that there was a 19% increase from Q4 2015 to Q1 2016 in accounts that were three or more months in arrears.

Although there was a less significant increase (9%) in these accounts that were three or more months overdue from Q1 2016 to Q2 2016, the trend remains a concerning one, Eksteen said.

“We noted that VAF loans of a medium value, from R101,000 to R250,000, had been subject to the highest percentage of adverse enforcements, followed by those from R250,001 to R400,000,” he said.

Adverse accounts: VAF loans

VAF balance
% of adverse enforcements
Less than or up to R50 000 2.56%
R51 000 to R100 000 7.80%
R101 000 to R250 000 49.69%
R250 001 to R400 000 18.63%
R400 001 to R999 999 18.54%
R1 million+ 2.77%

According to Compuscan’s data, the number of consumers that had been declared over-indebted and were part of the debt counselling process as at the end of Q2 2016 had increased by 8% from quarter to quarter to over 158,000 consumers.

There was additionally a 6% increase in the number of individuals whose worst position was an adverse status on one or more of their accounts, as well as a 7% increase in the number of accounts that were three or more months in arrears.

Rather notably, there was a 20% increase in the number of revolving loans with adverse statuses.

The data further revealed that of the approximate 70 million  accounts that were open on the bureau as at the end of Q2 2016, only about 47 million of these had been paid up to date.

More on debt in SA

South Africans owe billions in debt that they simply can’t pay – and worse is still to come

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Crisis hits South African homeowners as debt starts to choke