The latest credit figures show that as consumers we are starting to take up more credit.
Until recently most of the demand for credit came from mortgages and car finance. However, in the three months ending in September we saw a significant uptick in unsecured borrowing — in other words, credit cards and short-term loans.
The increase in credit is up 11,23% compared with the previous three months ending in June, but it has increased by a massive 40,32% compared with the same period last year.
The National Credit Regulator (NCR) drew attention to the rapid growth in unsecured lending, which has seen a year-on-year growth of 59,85%.
In the three months ending in September, consumers increased their credit facilities, which mainly consists of credit cards, store cards and bank overdrafts by R8,81-billion.
The total value of new credit granted over this period came to R75,14-billion for the quarter ended September 2010. Most of this came from new mortgages, which accounted for R26,34-billion.
Although some of this mortgage credit could be a result of people tapping into their existing mortgages, with the average house price at around R700 000, that would represent around 37 000 new homes. Over the quarter consumers bought R25,2-billion-worth of cars on credit.
According to the NCR report, 6,87-million credit applications were received, which is 18% higher than last year.
Although the rejection rate of applications by credit providers improved marginally, with 39,13% being rejected compared with 40,26% for the quarter ended June 2010, it still shows that consumers are struggling both with poor credit records and affordability.
As at September 2010, consumers owed a total of R1,17-trillion. Mortgages accounted for R755,39-billion (64,71%) and “secured credit agreements” (mostly car finance) was R215,34-billion (18.45%). Credit facilities such as credit and store cards accounts for R129,69-billion of our debt.
According the NCR, of this total debt R87-billion has fallen into arrears, representing 7,5% of all consumer debt.
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