Demand for debt counselling increases by 22% - DebtBusters
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GUEST – Benay Sager, executive head of DebtBusters
Persistently high interest rates and inflation – especially food inflation - continue to erode consumers’ disposable income, while a lack of any meaningful economic growth is constraining salaries.
Despite this, debt-to-annual-income ratio has remained stable for the past three quarters at 107%. While lower than 2023 levels, this is still high.
These are some of the findings from DebtBusters’ Q1 2024 Debt Index. The quarterly analysis of data from debt-counselling applicants also found that demand for debt management increased, with debt-counselling enquiries rising by 22% and the use of online debt management services up by 30% compared to the same period last year.
Benay Sager, executive head of DebtBusters, says although the improvement in overall debt levels combined with consistent monthly debt repayment trends are positive, the impact of increased interest rates on asset-linked debt is particularly evident in the 40+ age category.
The average interest rate for a bond has increased from 8.3% per annum in Q4 2020 to 12.3% in Q1 2024. For a R1.5million bond this adds an extra R4 000 per month to the repayment amount.
Persistently high interest rates and inflation – especially food inflation - continue to erode consumers’ disposable income, while a lack of any meaningful economic growth is constraining salaries.
Despite this, debt-to-annual-income ratio has remained stable for the past three quarters at 107%. While lower than 2023 levels, this is still high.
These are some of the findings from DebtBusters’ Q1 2024 Debt Index. The quarterly analysis of data from debt-counselling applicants also found that demand for debt management increased, with debt-counselling enquiries rising by 22% and the use of online debt management services up by 30% compared to the same period last year.
Benay Sager, executive head of DebtBusters, says although the improvement in overall debt levels combined with consistent monthly debt repayment trends are positive, the impact of increased interest rates on asset-linked debt is particularly evident in the 40+ age category.
The average interest rate for a bond has increased from 8.3% per annum in Q4 2020 to 12.3% in Q1 2024. For a R1.5million bond this adds an extra R4 000 per month to the repayment amount.
