August 2021 IDM Special Edition

This is according to the DebtBusters’ 2021 Q2 Debt Index, which tracks
client trends quarter-on-quarter and over the past five years.
In the second quarter enquiries about debt counselling increased by 18%
compared to a year ago. Benay Sager, head of DebtBusters, attributes
this to the after-effects of the nationwide lockdown and a narrowing of
consumers’ ability to borrow.
He says that the debt levels have increased substantially and the number
of open accounts have decreased for consumers applying for debt
counselling, both of which indicate that consumers are seeking help
sooner.
The pool of consumers borrowing has also shrunk, as supported by
National Credit Regulator data, which indicates average unsecured loan
size has increased by 46% and number of loans has decreased by 31%
over the last four years.
Compared to the same period five years ago the Debt Index found:
• Real income is declining as inflation continues to bite: Nominal
incomes were, on average, 3% higher than in Q2 2016, but when
cumulative inflation growth of 24% is factored in, real incomes have
shrunk by 21%.
• The debt-to-net-income ratio is at an all-time high: Consumers
enquiring about debt counselling are spending around 60% of their
take-home pay to service debt. More concerning is that across all
income bands the debt-to-income ratio is now at 122% and 152%
for those taking home R20 000 or more.