Families consider more loans as they 'struggle to bounce back'
Most South Africans have a growing appetite for credit as their prospects decline in the pandemic- with only 3% of surveyed households saying their finances have fully recovered.
This is according to a survey by TransUnion, a consumer credit reporting agency.
It found that eight out of 10 households consider access to credit important, but only 33% believe that they have sufficient access to credit.
“Almost a third plan to apply for new credit or refinance existing credit within the next year, with new personal loan (43%) and new credit card (35%) applications being on top of the list.
“Forty-three percent of surveyed consumers considered applying for new credit or refinancing existing credit, but ultimately decided not to: 35% felt that the cost of new credit or refinancing was too high, and a few believed their application would be rejected due to low income or their employment status,” said the report conducted in mid-August.
Weeks after the country was gripped by civil unrest and a peak in the third wave of Covid-19 cases, shows that nearly two-thirds of South African consumers said their household income was decreased due to the pandemic.
This number has remained steady since the beginning of 2021.
“The study highlights the fact that a substantial proportion of South Africans remain under financial pressure. What’s concerning is that we’re seeing signs of our country’s famous optimism waning.
“This could be as a result of the unrest and spike in Covid-19 cases in July, combined with the slow pace of economic recovery in the country,” said Andries Zietsman, TransUnion SA’s Head of Financial Services.
The proportion of consumers who were upbeat about the future decreased to 69%, from 75% in June and 76% in March, while less than half said they were confident that their household finances will fully recover in the next 12 months.
“Only 3% of surveyed households said their finances have fully recovered from the effects of the pandemic, and exactly half (50%) said they have not recovered.
“In addition, 79% of consumers said they are ‘very or extremely concerned’ about the current inflation rate, and 83% were making changes to their purchasing behaviour as a result.” said the report.