Eighty20's Bubbles report explores a question that is playing on the minds of many South Africans – are we experiencing an unsecured credit bubble?
The NCR statistics that are examined in this report show two interesting trends. The first is the astounding growth in unsecured credit relative to other consumer credit categories. From 2009 to 2011 the value of unsecured credit grew at a compound annual growth rate (CAGR) of 44%, compared to just 3% for mortgages over the same period. The second trend is the marked increase in both loan size and term for unsecured loans. Unsecured loans with a term of more than 3 years have experienced a 73% CAGR from 2008 to 2011. In this category the average loan size has increased from R21 500 to R35 000 over this period.
In response to these statistics, the report examines key trends in the consumer market and how these interact with credit market developments. Through the use of a variety of data sources, principally credit bureau data, data published by regulators and survey data, the report explores issues such as sizing of the South African credit active market, credit product uptake by income category and product level performance, amongst others. The report also explores various indicators on the financial health of South African consumers themselves, including repeat borrowing activity, debt to income ratios and instalment to income ratios.