Consumer appetite for credit is up, but a concerning trend is that new loan default rates are increasing in most income categories. Rising interest rates and inflation are hitting middle-class consumers who have vehicle asset finance agreements and home loans particularly hard.for the fourth quarter of 2022 reveals that despite continued inflation and rising interest rates, cash-strapped consumers are turning to credit to finance their lifestyles and purchases.
Of concern, however, is that a growing number of consumers who take out retail credit are not able to service their growing loan instalments in the current high interest rate environment. According to Eighty20, increased financial pressure takes time before it translates to higher default rates, the latter which is defined as more than 90 days in arrears.