Consumers owe R1.66 trillion- NCR

We are constantly being inundated with stats that speak to everything from over indebtedness to misusing credit. This further proven by the release of the Consumer Credit Market Report (CCMR) and the Credit Bureau Monitor (CBM), this past Friday. It found that consumers collectively owe R1.66 trillion in outstanding credit.

These editions covered credit market data for up to March 2016. The reports which are compiled from data submitted by both the National Credit Regulator (NCR) and individual credit bureaus focused in on trends surrounding South Africans’ relationship with credit.

“The number of applications for credit decreased by 11.72% quarter-on-quarter from 11.32 million in December 2016 to 9.99 million in March 2016. The total value of new credit granted decreased by 12.74% quarter-on-quarter from R124.15 billion to R108.33 billion,” stated the NCR.

Key trends

-“The value of new mortgages granted decreased by R6.52 billion (16.45%) quarter-on-quarter but increased by R1.38 billion (4.34%) year-on-year,” the NCR concluded.

-Secured credit, which is primarily dominated by the vehicle finance sector, ‘decreased by R7.61 billion (18.22%) quarter-on-quarter and by R3.32 billion (8.85%) year-on-year.’

-The report also highlighted a decrease in credit facilities by R658.76 million (4.72%) quarter-on-quarter and by R3.69 billion (21.72%) year-on year.

-“Unsecured credit decreased by R3.59 billion (15.97%) quarter-on-quarter but increased by R1.48 billion (8.49%) year-on year,” explained the NCR.

Outstanding balances

As per the end of March 2016, the total outstanding consumer credit balance was R1.66 trillion. This was representative of an increase of “0.91% quarter-on-quarter and 2.94% year-on-year,” said the NCR.

The further breakdown included:

“Mortgages debtor’s book increased by R7.60 billion (0.89%) for the quarter ended March 2016 and by R14.81 billion (1.75%) on a year-on-year basis. The secured credit debtor’s book increased by R933.10 million (0.25%) for the quarter ended March 2016. On a year-on-year basis, the book grew by R16.80 billion (4.75%).

“Credit facilities debtor’s book increased by R3.16 billion (1.46%) for the quarter ended March 2016 and by R11.73 billion (5.65%) on a year-on-year basis. While the unsecured credit debtor’s book increased by R477.81 million (0.29%) for the quarter ended March 2016 but decreased by R1.47 billion (0.88%) on a year-on-year basis,” reported the NCR.

Despite the amount of credit applications and subsequent approvals having declined, the amount of credit active consumers still experienced a 0.59 % increase.

“Consumers classified in good standing increased by 460,000 to 14.33 million consumers. As a percentage of the total number of credit-active consumers at 58.44%, this reflects an increase of 1.58% quarter-on-quarter and 5.06% year-on-year,” the NCR said.

Nomsa Motshegare, CEO of the NCR encouraged: “Consumers [should] only use registered entities when doing business as this will advance their rights as provided in the NCA. This includes registered credit providers, credit bureaus, debt counsellors, payment distribution agencies and alternative dispute resolution agents.”

Recently, the Minister of Trade and Industry, Dr Rob Davies, determined a new threshold of NIL (0) in order to determine ‘whether or not a credit provider is required to be registered with the NCR from the 11th May 2016,” Motshegare explained. “This means that any person or entity that is involved in the provision of credit is now required to register, irrespective of the number of agreements and / or the value of the principal debt.”

  Handy tip: Credit is both a necessary and hindrance, thus it requires careful management, especially in these tough economic times. If you’re worried about the level of debt you carry why not speak to your financial advisor or debt counsellor.