Consumers are in serious trouble

[BusinessTech]

Consumers are in serious trouble

There has been a significant increase in the number of consumers who are defaulting on payments, as they struggle to cope with rising rates, higher prices and a tough economy.

 

[Ho3n3r]

That's something I don't understand - we're struggling our asses off already, but due to rising inflation which is causing it, the logical thinking is to up the interest rate? How is my homeloan payment going up by R700 in the matter of a year helping inflation, and me keeping my head above water?

Surely the more logical thing would be to decrease interest rates, and make it harder to get any new credit in the first place - but once you get the credit, you should be able to pay it off easier, not with even more difficulty.

When my home loan and car loan goes up, everything else is becoming harder to pay. I guess that's why other people are defaulting more and more.

 

[Other Pineapple Smurf]

Live the lifestyle you can afford, not the lifestyle your creditors tell you to live.

I can afford my monthly commitments on half of my salary including my bond and modest car.

 

[akescpt]

i don't understand. didn't they say last week im richer than i was last year?

 

[TEXTILE GUY]

Another big sign that consumers are in trouble is the massive 17% drop in new car sales seen in the latest data from the country’s vehicle industry.

The way we price cars in SA I am not surprised.....

 

[saturnz]

i don't understand. didn't they say last week im richer than i was last year?

on Bloomberg right now they had a guy talking about how millennials are concerned they will be poorer than their parents

 

[Messugga]

The way we price cars in SA I am not surprised.....

Yip. It's not as if car prices haven't gone up like mad within the last year.

 

[HavocXphere]

That's something I don't understand - we're struggling our asses off already, but due to rising inflation which is causing it, the logical thinking is to up the interest rate? How is my homeloan payment going up by R700 in the matter of a year helping inflation, and me keeping my head above water?

Higher interest rates create an incentive to save & a disincentive to borrow money (at the now higher rate). This in turn reduces the money supply & economy slows and thus inflation is reduced.

The big problem comes in when you've got both high inflation and low growth. As per the above the anti-dote to inflation slows the economy so its incredibly difficult to fight both at the same time. So difficult that there is a name for it: stagflation. (Stagnation + inflation). Keeping inflation under control is the lesser of the two evils...hence then increasing rates even though they know you'll suffer.

 

[Shi]

Rental payments take a turn for the worse
http://www.iol.co.za/business/personal-finance/rental-payments-take-a-turn-for-the-worse-2051198

 

[saturnz]

That's something I don't understand - we're struggling our asses off already, but due to rising inflation which is causing it, the logical thinking is to up the interest rate?

http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?


according to that data inflation hasn't been rising as such but more or less has been range bound for the past five years, infact inflation dropped from 2014 to 2015

 

[Kosmik]

75%? Damn.

I think my debt expense ( homeloan and credit repayments ) is around 40%. Food is gobbling up a larger and larger chunk of the budget, it's my next highest expense.

 

[akescpt]

my debt to expense ratio is ****ed

 

[saturnz]

75%? Damn.

I think my debt expense ( homeloan and credit repayments ) is around 40%. Food is gobbling up a larger and larger chunk of the budget, it's my next highest expense.

that figure was over 80% just before the financial crisis, since then interest rates have come down significantly and yet people continue to consume debt as opposed to settling it

so Ho3n3r's suggestion that a drop in interest rates will lead to people deleveraging is highly unlikely to occur given the data to date

 

[zahpat]

That's something I don't understand - we're struggling our asses off already, but due to rising inflation which is causing it, the logical thinking is to up the interest rate? How is my homeloan payment going up by R700 in the matter of a year helping inflation, and me keeping my head above water?

Surely the more logical thing would be to decrease interest rates, and make it harder to get any new credit in the first place - but once you get the credit, you should be able to pay it off easier, not with even more difficulty.

When my home loan and car loan goes up, everything else is becoming harder to pay. I guess that's why other people are defaulting more and more.

Brilliantly said!

 

[NarrowBandFtw]

That's something I don't understand - we're struggling our asses off already, but due to rising inflation which is causing it, the logical thinking is to up the interest rate? How is my homeloan payment going up by R700 in the matter of a year helping inflation, and me keeping my head above water?

We're too dependent on capital flowing in from outside our borders. Those investors need to believe ZA is a good choice for their money and with zumatello and all that is wrong with the ANC / country there really isn't much to entice them other than interest rate hikes sadly.

Surely the more logical thing would be to decrease interest rates, and make it harder to get any new credit in the first place

It never works that way, the lower the rates the more banks will have to lend to keep making the same profits. Lower rates will inevitably cause more reckless lending, not less and increased regulation will not stop that, only delay it perhaps.

 

[LazyLion]

People get themselves into debt voluntarily.

 

[NarrowBandFtw]

http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?


according to that data inflation hasn't been rising as such but more or less has been range bound for the past five years, infact inflation dropped from 2014 to 2015

That's just clear proof that the official inflation data is BS, my shopping behaviour has not changed and one hand basket at the grocery store averaged around R200 early last year, just this week I cracked R500 for the same basket, 5 - 6% inflation my ass!

 

[konfab]

That's just clear proof that the official inflation data is BS, my shopping behaviour has not changed and one hand basket at the grocery store averaged around R200 early last year, just this week I cracked R500 for the same basket, 5 - 6% inflation my ass!

This is the real issue in South Africa.
Food, goods and fuel have skyrocketed.

 

[saturnz]

That's just clear proof that the official inflation data is BS, my shopping behaviour has not changed and one hand basket at the grocery store averaged around R200 early last year, just this week I cracked R500 for the same basket, 5 - 6% inflation my ass!

then come up with stats that will stand the test of peer review

 

[ellyally]

Well, luckily petrols coming down, and we all know that means food prices will come down