Experian’s latest Consumer Default Index (CDIx) report reveals a slight but encouraging year-on-year (YoY) improvement for the first time in nearly two years. This improvement indicates possible stabilisation in consumer debt management, although challenges remain. The CDIx measures the quarterly default behaviour of South African consumers across various loan types including home loans, vehicle loans, personal loans, credit cards and retail loan accounts. The composite CDI moved from 4.88 in June 2023 to 4.77 in June 2024.
A quarter-on-quarter (QoQ) deterioration was observed, which was expected in Q2 considering the CDI’s cyclic nature. This is the result of festive season spending particularly during an extended Black Friday period during Q4. Head of Commercial Strategy & Innovation at Experian, Jaco van Jaarsveldt, said, “As Experian continues to empower individuals through innovative financial solutions, it is encouraging to see the Consumer Default Index (CDI) show signs of returning to the typical cyclical pattern, as this pattern has not been observed over the preceding 18 months.”
While Home Loans, still saw a 3% relative decline in CDI performance, it was an improvement, compared to the 21% drop observed in Q1 2024. Although home loans represent 53% of the total market exposure, positive trends in other product areas such as credit cards and vehicle loans, were strong enough to offset this dip. Credit Cards saw a notable improvement of 9%, with the CDI moving from 8.17 to 7.41 YoY. Vehicle Loans also demonstrated a substantial improvement, with a 5% decrease in the CDI from 4.85 to 4.58.
“The improving trends across most credit products are evident at the Financial Affluence Segment (FAS) level, with only the most affluent Luxury Living segment, showing a year-on-year (YoY) decrease. This continued decline correlates with the continuous deterioration in the home loan performance, as this FAS group holds the majority market home loan exposure,” adds van Jaarsveldt.
Market Appetite Remains High, Approval Levels Low
The appetite for consumer credit has shown a reduction in Q1, following the heightened demand during the festive season. This is reflected in the National Credit Regulator’s (NCR) report on total credit enquiries (considering all credit bureaus in South Africa). Overall, appetite remains high, highlighting that consumers are looking for credit to cover shortfalls in their cost-of-living expenses. Approval levels remain low at 32.7% in the latest data. This means that more than two-thirds of applications are rejected by credit providers, contributing to the improved CDIx performance across most products and Financial Affluence Segment (FAS) groups.
The latest report also reveals a complex picture of women’s participation in the South African credit landscape. Despite constituting over half of credit bureau consumers, women hold only 38% of outstanding debt, indicating an underrepresentation in the credit economy. However, positive strides are evident in women’s growing participation in secured credit, with notable increases in home loans and vehicle finance over the past four years. This progress, coupled with women representing two-thirds of the retail loan market, underscores the significance of this sector for credit-active South African women.
“From a Consumer Default Index (CDI) perspective, we’ve seen a shift in recent months, with women’s CDI exceeding the market average. This suggests a growing reliance on credit, particularly home and personal loans, as women take on greater financial responsibility for their households. While this shift reflects their increasing empowerment and independence, it also highlights the need for increased debt management ” concludes van Jaarsveldt.
Experian remains dedicated to developing innovative solutions and initiatives that empower consumers and promote financial health around the world. To help alleviate these pressures and empower consumers in South Africa, ‘Up’, Experian’s free web-based app is designed to improve financial health and drive financial education. This platform provides users with the tools and knowledge they need to take control of their financial well-being.
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