Credit Extension Slows Down
National Credit Regulator
The National Credit Regulator (the "NCR") released the Consumer Credit Market Report (the "CCMR") and the Credit Bureau Monitor (the "CBM") for March 2021. The CCMR is based upon the Statistical Returns which credit providers are required to submit in terms of the National Credit Act (the "NCA"). Credit bureaus create consumer credit profiles based on credit information received from credit providers, courts, and utility service providers which are used to compile the CBM. The latest edition of these reports covers credit market information from January 2021 to March 2021.
One of the significant trends identified is, that the value of new mortgages and secured credit (which is dominated by vehicle finance) granted, decreased for the quarter but increased compared to the previous year. The total value of new credit granted decreased by 10.11% from the previous quarter from R154.42 billion to R138.81 billion whereas the number of credit agreements entered into decreased by 12.66% from the previous quarter.
The total outstanding consumer credit balances, referred to as the gross debtor's book, as of March 2021 was R2.04 trillion, representing an increase of 1.27% from the previous quarter and 2.68% from the previous year.
Credit bureaus indicated that the amount of credit-active consumers increased from the previous quarter and that consumers classified in "good standing" increased by 216,007 consumers. Good standing is defined as an account or consumer showing as current or on which the client has not missed more than one or two instalments, which has no adverse listings and has no judgments. Notwithstanding the increase of good standing consumers, there are still 10.52 million credit-active consumers who are not in good standing.
The NCR stated that consumers are facing tough times and encourage those who are battling to keep up with their debt to utilise the different debt relief options provided for in the National Credit Act and by the industry.