Credit reporting agency TransUnion said South African consumers were becoming more cautious amid the economic pinch.
FILE: The CEO added consumer debt levels were on the rise. Picture: Pexels
JOHANNESBURG – Credit reporting agency TransUnion said that the latest repo rate announcement was a blow to already cash-strapped South African consumers.
The repo rate increased by 50 basis points on Thursday.
This means the rate went up by more than 300 basis points since the end of 2021, bringing the repo rate to 7.75% and the prime lending rate to 11.25%.
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TransUnion CEO Lee Naik said two out of three consumers already needed to cut back on spending, amid the heightened cost of living.
“TransUnion’s 4th quarter Consumer Pulse Study found that two out of three, 67%, consumers have already cut back on discretionary spending in the past three months, and the latest increase in borrowing costs will further erode their disposable income and their ability to pay their bills.
“Consumers with vehicle asset finance and home loans will be particularly hard hit, as these large repayments continue to grow.”
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Naik added consumer debt levels were on the rise.
“While higher interest rates often signal an increase in distressed borrowing, TransUnion’s 4th quarter South Africa Industry Insights Report shows that consumers are becoming more cautious, with delinquencies improving year on year as they prioritise paying off debt faster in the face of rising borrowing costs.”