{"id":836414,"date":"2025-09-01T09:41:06","date_gmt":"2025-09-01T07:41:06","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=836414"},"modified":"2025-09-01T09:41:12","modified_gmt":"2025-09-01T07:41:12","slug":"south-africas-richest-people-are-drowning-in-debt","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/836414\/south-africas-richest-people-are-drowning-in-debt\/","title":{"rendered":"South Africa\u2019s richest people are drowning in debt\u00a0"},"content":{"rendered":"\n

South Africa\u2019s richest people are spending close to half of their income on debt instalments. <\/p>\n\n\n\n

This is according to the latest Credit Stress Report from Eighty20 for the second quarter of 2025. <\/p>\n\n\n\n

The quarter saw contracting signals for consumer finance, with improvements in petrol prices, inflation and consumer confidence leading to the strong year-on-year growth in loan numbers since Covid. <\/p>\n\n\n\n

That said, the overdue balance for some loan products has significantly increased, with the growth in home loan and credit card overdue balances especially concerning. <\/p>\n\n\n\n

Eighty20 also noted an increase in the number of defaulting loans for the first time since early 2023.<\/p>\n\n\n\n

The overall instalment to net income ratio for all credit-active South Africans was 28% in Q2 2025. This means over a quarter of net income is spent on servicing debt. <\/p>\n\n\n\n

This burden is most significant for the Heavy Hitters, with 48% of their monthly income going to instalments. Heavy Hitters refer to South Africa\u2019s top 5% of earners. <\/p>\n\n\n\n

There were roughly 5,500 new-to-credit individuals in the Heavy Hitter segment, which accounted for 13.5% of all new loan balances for the quarter. <\/p>\n\n\n\n

The segment’s total loan balances increased by 1.4% quarter-on-quarter to R1.7 trillion, accounting for 65% of the country’s overall debt.<\/p>\n\n\n\n

Home loans made up the majority of debt for the segments with a balance of R1 trillion, an increase of 1.1% quarter-on-quarter. <\/p>\n\n\n\n

Total overdue balances on home loans are up to R11.8 billion (4.6% quarter-on-quarter), contributing to the segment’s 3.3% quarter-on-quarter increase in total overdue balances<\/b>.<\/p>\n\n\n

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Source: Eighty20<\/figcaption><\/figure><\/div>\n\n\n

Not the only one <\/h2>\n\n\n\n

Middle-class workers also spend a large amount of their income on debt repayments, at 37%. <\/p>\n\n\n\n

This is a large segment of around 3.6 million people, but it doesn\u2019t have many new entrants to credit. <\/p>\n\n\n\n

The segment took out 1.1 million in new loans this quarter, at a 12% quarter-on-quarter increase, with the majority being unsecured. <\/p>\n\n\n\n

The total balance of unsecured loans increased marginally by 0.2% quarter-on-quarter to R132 billion. <\/p>\n\n\n\n

Overdue balances increased overall by 0.8% quarter-on-quarter, driven by a 1% quarter-on-quarter increase in credit card balances and a 4% quarter-on-quarter increase in home loan overdue balances.<\/p>\n\n\n\n

Elsewhere, the Mass Market pays 19% of their income towards debt, and saw about 340,000 new to credit applications, who took out 405,000 loans, more than half of which were retail. <\/p>\n\n\n\n

Almost all of the 2 million new loans taken out by the segment in Q2 were retail and unsecured. <\/p>\n\n\n\n

The segment’s number of credit card holders jumped by 7% quarter-on-quarter to 1.3 million, with credit card overdue balances increasing by 6% quarter-on-quarter to R5 billion. <\/p>\n\n\n\n

Despite the increased number of people using credit in the mass market segment, the percentage of defaulters decreased 0.3% quarter-on-quarter to 52.5%.<\/p>\n\n\n\n

Lastly, Comfortable Retirees now spend 22% of their monthly income on servicing debt, marking an increase from the 21% seen a year ago. <\/p>\n\n\n\n

Despite their increased age, the segment saw roughly 5,000 new-to-credit individuals, accounting for just under 3% of total new credit balances for the quarter.<\/p>\n\n\n\n

The segment saw a 3% quarter-on-quarter increase in open loans, with total loan balances reaching R208 billion. <\/p>\n\n\n\n

The segment took out roughly 180,000 new loans, a 10% quarter-on-quarter increase. More than half of these were unsecured loans. <\/p>\n\n\n\n

Overdue balance grew by 6% quarter-on-quarter to R20.7 billion, with the number of defaulters increasing to 300,861, a 0.6% quarter-on-quarter increase.<\/p>\n\n\n

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Source: Eighty 20. Click to enlarge. <\/figcaption><\/figure><\/div>\n\n\n
\n","protected":false},"excerpt":{"rendered":"

South Africa’s richest people hold most of the nation’s debt, but are struggling to pay it off. <\/p>\n","protected":false},"author":95,"featured_media":700011,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[11121],"tags":[17573],"class_list":["post-836414","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-eighty20"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836414","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=836414"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836414\/revisions"}],"predecessor-version":[{"id":836430,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/836414\/revisions\/836430"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/700011"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=836414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=836414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=836414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}