SA’s biggest four banks have about R98bn home loans in the last stage before they're categorised as non-performing, which Standard Bank said showed the impact of high interest rates on consumers, reports BusinessLIVE.

Standard Bank said the surge in interest rates since November 2021 had put pressure on consumers.

Thabani Ndwandwe, chief risk officer at Standard Bank SA, said the increase in rates resulted in a 42% increase in monthly repayments for a 20-year home loan. This came after the number of first-time home buyers rose in 2021 and 2022 due to the low interest rates SA experienced during the global pandemic.

Many customers have fallen short in their repayments over the last two years, according to Ndwandwe, who said that across the big four banks about 8.3% of mortgages were almost in distress.

Ndwandwe added that more than 20% of customers were going into debt review because of the financial strain and were looking for ways to protect their assets.

There has been a corresponding increase in activity from debt counsellors, encouraging customers to enter debt review, with the debt portfolio at the industry level now at over R80b, which is a substantial figure with long-term consequences, according to Standard Bank.

This comes after Gerrie Fourie, CEO of Capitec, said last month that the trend of debt counsellors placing consumers under debt review when their financial position did not warrant it was not in the interests of clients.

Standard Bank said consumers were encouraged to make use of the debt relief service options that their lenders had made available so that they could receive timely debt assistance.

Standard Bank's view is that interest rates will start to be cut in the second half of the year, but cautioned that there's significant uncertainty due to elections, both globally and in SA, which could delay a decline in interest rates.

Full BusinessLIVE report