
Consumers buying homes and clothes on credit despite high interest rates
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GUEST – Weihan Sun, director of financial services research and consulting at TransUnion South Africa
Stronger year-over-year (YoY) demand and lower delinquencies showed that South African credit card holders remained resilient during Q2 2023. In addition, balance growth trended upwards in response to the continued economic headwinds as consumers turned to credit for living expenses. These are some of the findings of the TransUnion (NYSE: TRU) Q2 2023 South Africa Industry Insights Report, which tracks consumer credit trends across key credit products. The quarter saw yet another repo rate increase of 50 basis points by the South African Reserve Bank (SARB) in May, to 8.25%, with the prime lending rate rising to 11.75%, a 14-year high.
However, June figures began to show signs of improvement in economic conditions, with the inflation rate falling to 5.4%, further supported by a drop of 0.3% to 32.6% in the unemployment rate, alleviating some financial strain in the market. Optimism for positive future income trends remained high, with the Q2 TransUnion Consumer Pulse Survey showing that 72% of South Africans expected an increase in household income in the next 12 months. “The South African consumer credit market has grown compared to a year ago due to the significant number of new accounts originated, with lender appetite having widened over recent quarters,” said Weihan Sun, Director Financial Services Research and Consulting for TransUnion in South Africa. “Consumer credit scores remained relatively consistent compared to a year ago, which reflects the continued resilience of South Africa’s credit-active market.
Stronger year-over-year (YoY) demand and lower delinquencies showed that South African credit card holders remained resilient during Q2 2023. In addition, balance growth trended upwards in response to the continued economic headwinds as consumers turned to credit for living expenses. These are some of the findings of the TransUnion (NYSE: TRU) Q2 2023 South Africa Industry Insights Report, which tracks consumer credit trends across key credit products. The quarter saw yet another repo rate increase of 50 basis points by the South African Reserve Bank (SARB) in May, to 8.25%, with the prime lending rate rising to 11.75%, a 14-year high.
However, June figures began to show signs of improvement in economic conditions, with the inflation rate falling to 5.4%, further supported by a drop of 0.3% to 32.6% in the unemployment rate, alleviating some financial strain in the market. Optimism for positive future income trends remained high, with the Q2 TransUnion Consumer Pulse Survey showing that 72% of South Africans expected an increase in household income in the next 12 months. “The South African consumer credit market has grown compared to a year ago due to the significant number of new accounts originated, with lender appetite having widened over recent quarters,” said Weihan Sun, Director Financial Services Research and Consulting for TransUnion in South Africa. “Consumer credit scores remained relatively consistent compared to a year ago, which reflects the continued resilience of South Africa’s credit-active market.

