More than 60% of South African bond holders are paying their minimum contributions, while some 14% are paying extra each month. This is according to Richard Gray, CEO of Harcourts Africa, who quoted Old Mutual’s Savings and Investment Monitor for July.
“This represents a significant decline over the past few years: In 2013, 31% were making extra monthly contributions,” he said. “Middle- and low-income buyers were most likely to be making minimum payments; they have been particularly vulnerable to the rising cost of living. The prospect of defaults, and the loss of homes (with the accumulated investment they represent) is a very real and serious threat in this part of the market. This is especially the case where households may have been hit by unemployment.”
Gray expected this trend to continue over the medium term, given restrained expectations for South Africa’s economic performance.
“South Africans are increasingly stressed trying to make ends meet,” he said. “Many seek relief in scaling down their payments on long-term debts.”