The rate of consumers who defaulted on their loans for the first time increased in the first quarter of 2022, new data from Experian South Africa’s Consumer Default Index (CDI) shows.
The CDI increased quarter-on-quarter, moving from 3.49 in 2021 Q4 to 3.68 in 2022 Q1. Year-on-year, however, an improvement was observed, moving from 4.39 in 2021 Q1 down to 3.68 in 2022 Q1, said the information services company.
“However, consumers are cautioned against reading too much into the year-on-year improvements which can be attributed to the tail end of reduced credit lending by credit providers and spend by consumers due to the impact of Covid lock downs experienced in 2021. The decline in Q1 2022 indicates that consumers are becoming increasingly exposed to the rising cost of living, said Experian.
Consumers in ‘Luxury Living’ have a large exposure to secure lending products with an average opening home loan balance in excess of R1.2 million – 54% owning one home and 25% owning multiple properties – and an average opening vehicle loan balance greater than R450,000. The ‘Stable Spenders’, which make up about 7% of the population, saw the greatest relative CDI improvement from 7.30 in 2021 in Q4 to 5.27 in 2022 Q1 . This group is made up of consumers who are mostly young and middle-aged adults who live from month-to-month and require credit to make ends meet.
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