The prudence of the “heavily indebted household sector” and the application of “lending standards in the wake of the unsecured lending boom” led to consumer credit behaviour remaining stable at the end of 2015.
That’s according to TransUnion Consumer Credit Index (CCI) information for the fourth quarter of 2015‚ released on Thursday‚ that showed a marginal decrease to 52.1 from 52.3 the previous year.
A number greater than the 50 break-even point – on the 100-point scale - shows an improvement in credit health‚ TransUnion explained. “Encouragingly‚ the number of new defaults declined 5.1% from a year earlier‚ while distressed credit and store card utilisation‚ a measure of distressed borrowing‚ remained roughly stable‚” it said.
“Despite warnings of worsening macroeconomic conditions‚ consumer behaviour does not yet show signs of falling credit health. This is partly the result of an already heavily indebted household sector choosing to be more cautious‚ and partly the result of more prudent lending standards in the wake of the unsecured lending boom”‚ said TransUnion Africa’s Geoff Miller.
He‚ however‚ warned that the weaker rand and rising interest rates meant the “headwinds in 2016 could become fairly substantial”.
The CCI for the first quarter of 2016 is likely to be negatively affected by Reserve Bank hiking of the interest rates by 50 basis points in January.
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