Wealthy suburban couples least likely to default on debt repayment - index

Cape Town - Couples living in wealthy city suburbs have the lowest rate of first time default on credit repayments among consumers with debt in the country, according to the latest Experian Consumer Default Index (CDI).

According to the index findings, these couples are mature, well-educated and living in free-standing, high-value, established homes. Their rate of first-time default has improved from 1.95% in January 2017 to 1.81% in January 2018.

The latest index shows that first time credit defaults among SA consumers amounted to a total of R11.95bn between November 2017 and January 2018. About 13.9 million consumers in the country have credit card, personal loan, vehicle loan and/or home loan debt. The total outstanding consumer debt is estimated at R1.51trn.

The Experian Consumer Default index tracks the marginal default rate by measuring the sum of first-time defaulted balances as a percentage of the total sum of balances outstanding.

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The CDI improved from the 3.27% in January 2017 to 3.19% in January 2018, reflecting a year-on-year improvement in the rate of first-time defaulting debt balances. However, the index experienced a marginal increase over the 3.15% recorded for December 2017.

Year-on-year improvements were found across personal loans, credit cards and home loans. However, vehicle finance continued to experience increased first time default, declining from 2.67% in January 2017 to 3.29% in January 2018.

The category entitled "impoverished grant reliants" recorded the most significant year-on-year improvements with a CDI of 4.27% in January 2018 from 5.56% in January 2017. This group is categorised as families living rent-free in informal dwellings with children who rely on government grants.

The overall worst performing segment was "coastal low-wage households", which recorded a CDI of 7.13% in January 2018. This group is categorised by large, young households with a high unemployment rate, living in low-value coastal township properties.

Mixed-age families on minimum wages, living in small informal dwellings in the rural areas of the Northern Cape and the Free State recorded the worst year-on-year deterioration, moving from 5.52% in January 2017 to 6.52% in January 2018.

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