Despite rising interest rates and worsening economic conditions, South Africans seem to be coping with their debt. Data from the South African Reserve Bank and Stats SA’s Statistics of civil cases for debt release indicates some resilience on the part of South African debtors.

The South African Reserve Bank hiked the repo rate twice in 2015. In July it was raised from 5,75% to 6,00%; in November it was increased by a further 25 basis points to 6,25%. A further two increases were implemented in the first quarter of 2016, with a rise to 6,75% in January and a further increase to 7,00% in March. Servicing debt becomes more expensive when interest rates are raised. But South Africans seem to be keeping their debt in check, despite these increases.

The first indication of this comes from data published by the South African Reserve Bank. According to a statement in its Quarterly Bulletin for December 2015, the household debt-to-disposable-income ratio was 77,8% in the second quarter of 2015¹. This might seem quite high, until you consider the fact that the debt-to-disposable-income ratio has actually fallen in the last decade, peaking at 88,8% in the first quarter of 2008.

The second indication comes from Stats SA’s Statistics of civil cases for debt release, which covers statistics from Magistrates’ Court offices on the number of civil summonses issued and the number of judgements recorded for debt. These reveal that even though the value of bad debt covered by the judgements was up by 7,2% in 2015 compared with 2014, the actual number of judgements against defaulting debtors fell by 6,8%². The number of summonses issued for debt also fell over the same period, by 12,8%.

This follows a long-term trend of falling numbers of summonses and judgements recorded. The chart below shows how the number of civil summonses (monthly) has decreased over time.

With many predicting more interest rate hikes in 2016, South Africans might find themselves in conditions where servicing debt will be that much more difficult.

¹ South African Reserve Bank. Quarterly Bulletin, December 2015. Page 84. Click here to download.

² Annual figures were published in the December 2015 release of Statistics of civil cases for debt. Access the archive page here.