Unsecured credit remains in spotlight

Unsecured credit remains in spotlight


Johannesburg – Unsecured credit increased by 9.14 percent (R1.73 billion) in the quarter ended June compared with the quarter ended March, while the year-on-year increase was 18.1 percent (R3.16bn), the National Credit Regulator (NCR) said.

Unsecured loans – loans issued and supported only by the borrower’s creditworthiness – is in the spotlight as government has been taking steps to rein in unsecured lenders amid reports that they are charging exorbitant interest rates and initiation fees.

Trade and Industry Minister Rob Davies approved earlier this year the reduction of the threshold for registration from R500 000 to zero, effectively requiring all credit providers to register next month.

The NCR released last week the Consumer Credit Market Report and the Credit Bureau Monitor, which are based on data submitted to the NCR by registered credit providers and credit bureaus, respectively.

The NCR said the number of applications for credit decreased by 0.39 percent quarter on quarter from 9.99 million in March to 9.95 million in June. The total value of new credit granted decreased marginally by 0.01 percent quarter on quarter from R108.33bn to R108.32bn, the regulator said.

It said the value of new mortgages granted increased by 8.3 percent (R2.75bn) quarter on quarter, but decreased by 1.17 percent (R425.76 million) year on year.

“Secured credit, which is dominated by vehicle finance, increased by R1.79bn (5.25 percent) quarter on quarter but decreased by R427.45m (1.17 percent) year on year. Credit facilities decreased by R1.26m (9.44 percent) quarter on quarter and by R5.04bn (29.49 percent) year on year”.

Credit bureaus held records for 24.08 million credit active consumers, an increase of 0.85 percent when compared with the 23.88 million in the previous quarter.

“Consumers classified in good standing increased by 79 000 to 14.41 million consumers. As a percentage of the total number of credit active consumers at 59.84 percent, (and) this reflects a decrease of 0.18 percent quarter on quarter but an increase of 4.91 percent year on year.

“The number of accounts decreased from 84.96 million in the previous quarter to 84.56 million for the same period. The number of impaired accounts increased from 19.92 million (23.45 percent) to 20.24 million (23.93 percent) when compared with the previous quarter, an increase of 314 000 quarter on quarter and 1.47 million year on year.

The NCR said a total of 434.37 million enquiries were made on consumer credit records, an increase of 10.87 percent quarter on quarter and 5.23 percent year on year. Enquiries initiated by consumers accounted for 16.48 million of all enquiries, a decrease of 2.96 percent quarter on quarter and an increase of 24.62 percent year on year.

Credit reports

The number of credit reports issued to consumers rose from 129 458 to 145 013. Of the total credit reports issued, 75.04 percent (108 818) were issued without charge. There were 33 989 disputes lodged on information held on consumer credit records for the quarter to June, an increase of 14.99 percent quarter on quarter and 21.44 percent year on year.

NCR chief executive Nomsa Motshegare said the organisation had noted the deteriorating consumer credit health. She said consumers should draw up a monthly budget, to keep track of their expenditure and to live within their means, as they approached the festive season.

“Consumers who are already battling with their debt repayments are advised to approach their credit providers to find an alternative arrangement. Alternatively, over-indebted consumers can approach the nearest debt counsellor for assistance.”

A TransUnion survey said last week that while more than 72 percent of a group of local participants said their credit score was important, only 45 percent knew how credit reports were generated.

Meanwhile, 33 percent said they had never checked their report, 41 percent claimed they had checked in the last year and 8 percent had checked in the last 30 days.


BUSINESS NEWS / 10 October 2016, 07:40am

Siseko Njobeni



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