Interest rates kicking South Africans while they’re down

South African households are under significant pressure from persistently high interest rates and are being forced to turn to their credit cards to make ends meet as the banks close the taps on lending.

All of South Africa’s major banks have flagged growing credit impairments over the last year due to households struggling to pay back their loans. Growth in home loans eased to 3.0% from 3.3%, while vehicle finance slowed significantly to 6.9% from 8.2%. Personal loans decelerated to a weak 0.2% after slowing to 1.1% in February from 4.2% at the end of last year.households relied on credit cards and overdrafts to make ends meet and smooth consumption

While real incomes will recover as inflation recedes, the banking group said the pressure from high interest rates will likely persist for longer amid sticky global and domestic price pressures.

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