{"id":845645,"date":"2025-12-05T17:00:00","date_gmt":"2025-12-05T15:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=845645"},"modified":"2025-12-05T17:07:45","modified_gmt":"2025-12-05T15:07:45","slug":"south-africas-middle-class-scores-a-major-win","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/845645\/south-africas-middle-class-scores-a-major-win\/","title":{"rendered":"Major win for South Africa’s middle class"},"content":{"rendered":"\n

South African consumers are getting better at paying off their credit debts, with the country’s middle class experiencing a shift and improvement in repayment habits.<\/p>\n\n\n\n

According to the latest Eighty20\/XDS Credit Stress Report for the third quarter of the year, the total loan balance in South Africa increased by 0.8% quarter-on-quarter, reaching R2.6 trillion. <\/p>\n\n\n\n

This points to a cautious response from consumers to mixed economic signals.<\/p>\n\n\n\n

GDP growth is still muted, and unemployment remains high, despite the rate reducing, but with lower interest rates and low inflation, the appetite for credit has expanded.<\/p>\n\n\n\n

Eighty20 noted that both active accounts and outstanding credit balances grew significantly year-on-year, with vehicle finance showing particular strength.<\/p>\n\n\n\n

“The number of car loans and consumers with vehicle asset finance reached their highest levels in three years,” it said.<\/p>\n\n\n\n

When looking at overdue balances, however, things are looking positive. These balances decreased by R3 billion or 1.4% quarter on quarter, down to R212 billion.<\/p>\n\n\n\n

This brought the proportion of overdue debt down to 8.1% of total loan balances, down from 8.3% in Q2.<\/p>\n\n\n\n

This decline in overdue balances was driven by a R2.5 billion decrease (2.5% QoQ) in overdue personal loans and a R1.1 billion decrease (6% QoQ) in vehicle asset finance (VAF) overdue balances.<\/p>\n\n\n\n

The number of open loans grew by roughly 900,000 in the quarter. <\/p>\n\n\n\n

The number of loans in arrears (at least one month past due) fell by 89,575 to 17.9 million, bringing the percentage of loans in arrears down to 33.1% in Q3 from 33.8% in Q2. <\/p>\n\n\n\n

While this is still significant, this proportion has been dropping consistently since 2023 Q1<\/strong>, Eighty20 notes. <\/p>\n\n\n\n

The number of loans in good standing\u2014which has grown consistently for the past seven quarters\u2014grew by 1 million, or a 2.9% QoQ increase.<\/p>\n\n\n\n

This shows a continued upward, positive trend as more consumers work at paying off their debts and not falling into arrears.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

South Africa’s middle class shows positive signs<\/h2>\n\n\n\n

Middle-class South Africans, or credit-active adults earning roughly R8,000-R30,000 per month (or R25,000 as a household), have been struggling over the past few years in particular to keep their heads above water.<\/p>\n\n\n\n

But the data points to a cautiously optimistic shift.<\/p>\n\n\n\n

Middle-class worker volumes in the credit space have remained stable QoQ at 3.6 million, accounting for 12.9 million active loans. <\/p>\n\n\n\n

Of the 1.2 million new loans taken out by the segment this quarter, 73% were personal loans. <\/p>\n\n\n\n

By balances, personal loans comprise 25% of the total credit balances held by the segment, while overall
balances have risen by 2.2% YoY to R541 billion. <\/p>\n\n\n\n

Overdue balances have risen by 5.5% over the same period, with the average middle-class consumer having R23,000 overdue.<\/p>\n\n\n\n

However, the percentage of those in the segment with at least one loan in default has fallen<\/strong> to 41.5%.<\/p>\n\n\n\n

This tracks with the broader data, which shows that most market segments are getting to grips with their loans.<\/p>\n\n\n\n

Default levels (three months overdue) remain lowest for Heavy Hitters, Humble Elders and Comfortable Retirees, while the Mass Market continues to show the highest default prevalence at 51%.<\/p>\n\n\n\n

For the middle class, the levels have been generally flat, but the latest data marks a positive turn.<\/p>\n\n\n\n

According to data from DebtBusters, South Africans earning more than R20,000\u2014falling into a similar classification as the middle class here\u2014are spending almost three-quarters of their income paying off loans.<\/p>\n\n\n\n

Eighty20’s data shows that the average loan repayment in the segment is R9,388 per month, accounting for around 37% of monthly income.<\/p>\n\n\n\n

DebtBusters’ data relates specifically to those who have entered into debt rescue processes, with Eighty20’s data reflecting a broader consumer profile.<\/p>\n\n\n\n

Overall, credit-active individuals spent 28% of their net income on debt repayments in Q3, meaning between a quarter and a third of income goes toward servicing debt. <\/p>\n\n\n\n

The heaviest burden falls on Heavy Hitters, who allocate 48% of their monthly income to instalments, followed by Middle Class Workers at 37%. <\/p>\n\n\n\n

These markets have higher loan responsiblities due to them being for larger assets like vehicles or homes.<\/p>\n\n\n\n

The Mass Market spends 19% of its income on debt, while Comfortable Retirees spend 22% of their monthly income on repayments, up from 20% in 2023.<\/p>\n","protected":false},"excerpt":{"rendered":"

South African consumers are getting better at paying off their credit debts, with the country’s middle class experiencing a shift and improvement in repayment habits.<\/p>\n","protected":false},"author":10,"featured_media":784974,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[17573],"class_list":["post-845645","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\/845645","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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=845645"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845645\/revisions"}],"predecessor-version":[{"id":845682,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/845645\/revisions\/845682"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/784974"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=845645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=845645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=845645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}