{"id":423416,"date":"2020-08-10T08:50:37","date_gmt":"2020-08-10T06:50:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=423416"},"modified":"2020-08-10T08:48:37","modified_gmt":"2020-08-10T06:48:37","slug":"this-is-how-much-of-their-income-south-africans-are-spending-on-debt","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/423416\/this-is-how-much-of-their-income-south-africans-are-spending-on-debt\/","title":{"rendered":"This is how much of their income South Africans are spending on debt"},"content":{"rendered":"

Debt counsellor DebtBusters has published its index for Q2 2020, showing that South Africans are taking on increasing amounts of debt to help get through the coronavirus lockdown.<\/p>\n

The quarterly analysis tracks client trends quarter-on-quarter over the past four years.<\/p>\n

The group said that its Q2 2020 clients required around 62% of their net income to service their debt<\/strong> every single month; with higher income levels requiring more of their income to service their debt.<\/p>\n

On average, the group’s clients had a debt to income ratio of 113%, while those earning a net income of R20,000 or more had a debt to annual income ratio of 138%.<\/p>\n

“Although it\u2019s impossible to determine the full impact of the hard lockdown based on just one quarter, the four-year-trend shows that for most consumers debt levels are steadily increasing,\u201d says Benay Sager, DebtBusters\u2019 chief operating officer.<\/p>\n

“This is because nominal incomes have been flat, so in real terms, people have less income than in 2016, as inflation over the same period has been around 20% cumulatively.<\/p>\n

“As a result of lack of growth in their net incomes, consumers find themselves in a corner and have been borrowing heavily, especially using unsecured loans, to make up the shortfall.”<\/p>\n

Types of debts<\/strong><\/p>\n

DebtBusters said that the largest increase can be seen\u00a0in unsecured debt, which on average is 18% higher than it was four years ago.<\/p>\n

For consumers earning more than R10,000 per month, unsecured debt is 31% higher – for those earning R20,000 or more per month, the unsecured debt levels are 42% higher than 2016 levels.<\/p>\n

Consumers also typically owe money on home loans and vehicle financing.<\/p>\n

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Higher earners have more debt<\/strong><\/p>\n

The data shows that debt exposure worsened for clients in the R5,000-R10,000 and R10,000-R20,000 brackets.<\/p>\n

However, South Africans in the highest income brackets still maintain the highest exposure to debt<\/p>\n

“Consumers earning R20,000 or more a month had an unsustainable debt-to-income ratio of 138%. This is 12% more than during the same period in 2016,” Sager said.<\/p>\n

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“It is clear that in absence of meaningful increase in real income growth, SA consumers are supplementing their income with more debt on a large scale,” Debtbusters said.<\/p>\n

The group noted that in comparison to 2016, those clients who applied for debt counselling in Q2 2020 had:<\/p>\n