Lockdown's impact on the credit habits of South Africans, according to a new report

TransUnion recently released a report outlining the impact of lockdown on the credit lending habits of the average South African. Photo: Freepik
TransUnion recently released a report outlining the impact of lockdown on the credit lending habits of the average South African. Photo: Freepik

In their latest Consumer Credit Trends report, credit reporting company TransUnion outlines the impact of the COVID-19 lockdown on South Africans’ finances.

 “The latest report encompasses the first full quarter where COVID-19 related lockdowns and social distancing measures were in effect,” Carmen Williams, Director of Research and Consulting for TransUnion South Africa said in a statement.

 “Consumers and lenders have had to adapt to very challenging conditions and we are starting to see the emergence of a number of important trends.”

She went on to say that the use of payment holidays has contributed to a general increase in outstanding balances, but that at the same time, the demand for new credit declined significantly. The report says that this could be due to a number of factors including:

  • A combination of reduced access to branches and stores during the lockdown.
  • Uncertainty around employment.
  • The implications of the lockdown causing consumers to defer taking on new debt.

“Enquiries for credit cards declined by more than half the volumes reported in the prior year – a sign that consumer confidence has been significantly impacted by the pandemic,”  the report says.

READ MORE | How to cope with money anxiety 

“Conversely, the only category to see an increase in enquiries was home loans, primarily as pent-up demand caused by lockdown came through and interest rates fell improving affordability.”

Here's an infographic that shows some of the key credit habits insights from the report: 

credit lending
Infographic showing the key findings from TransUnion's Consumer Credit Trends report.
  

“Although many of the trends identified in this report are to be expected, it is important lenders and consumers don’t become complacent,” Williams concluded. 

“These are extraordinary times and lenders need to adopt new ways of thinking. Maintaining a deep understanding of portfolio risk as well as the potential impact of further shifts in the economy as consumers continue to adapt to a COVID-19 world, will allow lenders to develop strategies that can help them grow customer loyalty and build business resilience.”

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