How much money does the average person in South Africa currently owe for their car and house

New data from consumer credit reporting agency TransUnion shows South Africa’s auto finance market showing signs of recovery as start-up growth rate continues to improve, sales have increased and failure rates have improved.

The mortgage market is showing sustained signs of recovery as balance growth has accelerated significantly and mortgage loan growth has improved. The general upward trend in delinquency is a concern that requires urgent attention, he said.

The South African Industry Insights (IIR) report for the first quarter of 2021, released by TransUnion, found that origination volumes were only down 4.0% year-on-year in the fourth quarter of 2020, which is compared to Last year.
variation observed in Q1 2020: -4.8%.

New vehicle loan volumes have therefore returned to pre-pandemic levels. New loan amounts increased 7.6%, indicating that consumers are purchasing more expensive vehicles. This is also corroborated by the latest Transunion Vehicle Price Index (VPI) which showed that in the first quarter of 2021, the VPI for new and used vehicle prices had increased to 8.8% and 3.7%. respectively.

As such, the overall outstanding vehicle finance balances increased significantly by 16.7% year-on-year in the first quarter of 2021, also due to significantly higher average balances (up 20.2% year-on-year). annual).

Refinancing options, low interest rates, the surge in purchasing activity in the last quarter and the shift to more expensive vehicles all contributed to this increase.

Auto finance was the only type of product where default rates improved (down 30 basis points year-on-year). The first quarter of 2021 marked the first improvement in serious delinquency since 2016.

This improvement could be the result of a combination of factors: better portfolio management on the part of lenders, with consumers prioritizing vehicle loan payments over other products for convenience and security ( especially as local travel has opened up) or after several years of acceleration, unpaid bills have now become normal.

Mortgage loans

Home loans also saw a comparatively smaller decline in originations (down just 2.9% year-on-year) in the most recent quarter. The increase in balances reflects the slowdown in the supply of housing as demand continues to increase.

Consumers who have been successful in maintaining or even improving their incomes during the pandemic have driven demand and are increasingly prevalent in the market, TransUnion said.

Supply has generally declined as consumers continue to work from home and new home construction has declined. This mismatch between supply and demand caused a significant rebound in house prices and led to an increase in the average amount of new loans by 44% year-on-year in the first quarter of 2021.

Serious account default rates deteriorated for the fourth consecutive quarter, increasing 150 basis points to 6.4% in the first quarter of 2021.

“Although this increase is smaller than in previous quarters, this downward trend in delinquency has persisted for several quarters and requires intervention. Lender portfolio management and effective risk reduction strategies from the outset and throughout the account lifecycle become essential to mitigate this worrying trend, ”he said.

Read: Bad news for car buyers in South Africa

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