Consumers use costly credit to make ends meet – FirstRand | The Citizen

“Around customer affordability … we are seeing an increase in the [loan term] of financing; that is kind of stretching out. More customers are having to term-out funding for their vehicle over a longer period to make it more affordable,” he said.

FirstRand’s update is the latest to paint a bleak picture of the current state of the financial affairs of many consumers, whose spending power has been eroded by upwardly sticky inflation and the high interest rate environment.While banks enjoy handsome earnings from the endowment effect of the central bank’s policy tightening, the cost of debt immediately shoots up, weighing on consumers’ ability to afford repayments.

This year alone, the repo rate has already increased 125bps with two significant raises at the last two monetary policy meetings.

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Consumers use costly credit to make ends meet – FirstRandBanking group FirstRand says it has started to see a marked uptick in customers taking up unsecured credit to make ends meet as consumers bear the brunt of financial pressures brought on by SA’s economic conditions. Moneyweb Debt NtandoThukwana
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