Credit reporting group Experian, has provided a breakdown of consumer debt in South Africa, including which types of debt carry the highest risk in the country – and how much money is owed to lenders.

In the second quarter of 2019, the Experian Consumer Default Index (CDI) reached 3.76% – an increase from the previous quarter’s CDI of 3.56% as well as the year-on-year CDI of 3.53% recorded for Q2 2018.

This index is measured across 14.7 million consumers with credit card, vehicle loans, personal loans and/or home loans and relates to 18.2 million active accounts in South Africa.

An increase in the rate of first-time default has been observed year-on-year across all four lending products measured, with a total outstanding debt of R1.63 trillion and total new default balances of R15.55 billion.

Rising unemployment hits consumers

Whilst most South African consumers are feeling the pressure of continuous increases in daily living expenses; very low income, mostly unemployed, young families living in small properties or in a room of shared-housing in densely populated areas had the worst CDI, with a composite value of 9.36% in June 2019, deteriorating from 9.11% in June 2018.

“The distressed economy continues to negatively impact on South African consumers’ monthly cash flows, which is further exacerbated by the increase in the unemployment rate which increased to 29% in the second quarter of 2019,” said Jaco van Jaarsveldt at Experian.

“These increasing first-time default rates indicate that consumers, who are relying on credit to get through these tough economic times, are unfortunately failing to keep up with their repayments.”

“The worst year-on-year deterioration in composite CDI was observed in the Personal Loan Index, as more consumers turn to cash loans to support their monthly cash flow and debt servicing requirements, said Van Jaarsveldt.

“The CDI deterioration was evident across most of the Experian Mosaic consumer lifestyle segments, indicating that the distress is largely segment agnostic and a general market trend. The personal loan CDI increased to 8.67% (2018: 8.03%) in Q2 2019 and totalled R5.96 billion worth of first-time default value.”

Read: South Africa’s unsecured lending boom has left millions in a debt trap