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The Freedom Front Plus (VF Plus) noted with concern the reports that a year-end function was held for senior municipal officials of the Tshwane Metro last Friday, while residents across the Metro experience daily power outages, water problems and mounting financial pressure. According to information provided to the party, staff were instructed to describe the […]
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South African consumers reported improved optimism in their household finances during the third quarter. While concerns about inflation remain widespread, findings from TransUnion’s Q3 2026 South Africa Consumer Pulse Study suggest consumers are becoming more deliberate in how they borrow, spend and manage their money.
Household financial performance strengthened and income expectations remained positive. At the same time, South Africans continue to face ongoing economic pressures, indicating that consumers are balancing improving financial sentiment with careful financial decision making.
Half (50%) of South Africans said their household finances were better than planned at this point in 2026, up from 43% in Q2 2026. Meanwhile, the proportion of consumers who said their finances were worse than planned fell to 34%, down from 38% one year ago. Financial optimism also improved with 73% of consumers expressing optimism about their household finances in the next 12 months, compared with 68% a year ago.
Improvements in reported household finances and future income expectations were accompanied by positive income trends. More than four in ten consumers (41%) reported an increase in household income over the last three months, while only 16% experienced a decline. Looking ahead, nearly eight in ten consumers (79%) expect their income to increase over the coming year, up from 75% a year ago.
According to Ayesha Hatea, director of research and consulting at TransUnion Africa, the findings indicate that consumers are reporting stronger household financial outlooks and income expectations, while remaining mindful of ongoing economic pressures.
“What stands out this quarter is that consumers appear to be taking a more considered approach to managing their finances. The findings indicate that consumers are paying close attention to their household budgets, inflation, borrowing costs and spending habits. While many report improved household finances and income expectations, affordability and cost-of-living concerns remain an important consideration.”
Despite improved financial sentiment, South Africans remain acutely aware of ongoing cost-of-living pressures. Almost all respondents (97%) said they remain concerned about inflation, while 79% ranked inflation for everyday goods among the top three concerns affecting their household finances for the next six months. Although more consumers now feel their income is keeping pace with inflation, the cost of living continues to place pressure on household budgets.
The study found that 43% of consumers plan to apply for new credit or refinance existing products over the next year, up from 38% a year ago, while 58% believe they would be approved if they needed access to credit, up from 49% a year ago. Perception of access to credit has improved, with 51% saying they have sufficient access to credit products, up from 42% a year ago.
Consumers are, however, approaching borrowing more selectively. More than half (52%) considered applying for new credit or refinancing but ultimately chose not to proceed, up from 42% a year ago. Among these consumers, the cost of credit was the leading reason for not proceeding, according to 34% of those surveyed. More than nine in ten (92%) said rising interest rates affect whether they will apply for credit in the next 12 months. While these findings were captured before the South African Reserve Bank increased the repo rate by 25 basis points to 7.25%, they highlight that borrowing costs were already a significant consideration for consumers and may become an even more important factor in credit decision-making going forward.
“Consumers are demonstrating a more measured approach to borrowing. Rather than simply seeking access to credit, many are carefully evaluating whether a product meets their financial needs and circumstances. This creates an opportunity for lenders to align products, pricing and experiences more closely with evolving consumer expectations,” said Hatea.
Demand for credit remains broad-based, with the greatest proportion of consumers planning to apply for a new credit card (33%), a new car loan or lease (27%) or buy now, pay later services (25%). Consumers continue to embrace digital financial services, with nearly half (49%) reporting using websites or apps to send or receive money. With the use of digital financial services comes expectations around speed and convenience, and 86% of consumers said that real-time approval is important when applying for digital loans.
The study also points to signs of improving financial resilience. Fewer consumers expect to miss payments on bills or loans (32%, down four percentage points year-over-year), more said they’re paying down debt faster (34%, compared to 32% a year ago), and nearly one-third reported contributing more to emergency savings or stokvels (31%, up three percentage points year-over-year).
As digital adoption continues to increase, trust and security remain important considerations. Six in ten (60%) reported being targeted by email, online, phone call or text message fraud in the last three months, with 11% saying they fell victim to it. In addition, 29% said they were notified that their personal or account information had been compromised in a data breach in the last three months.
“South Africans continue to operate in a challenging economic environment, but the data points to a consumer that is becoming increasingly informed, resilient and deliberate in their financial choices. While reported household financial outlooks and income expectations have improved, affordability, value and long-term financial sustainability remain important considerations. Understanding these evolving consumer behaviours will be critical for organisations seeking to build trust and deliver products and services that meet consumers’ needs,” concluded Hatea.
Consumers can get their free annual credit report from TransUnion here.
The Freedom Front Plus (VF Plus) on Wednesday submitted a petition with hundreds of signatures to the Office of the Speaker of the Lesedi Local Municipality, requesting that existing by-laws be reviewed and stringently enforced in Heidelberg’s student housing area. In October last year, the Municipality approved Extension 5 for student housing without a public […]
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The Sol Plaatje Municipal Council failed to meet for the second time in a month. This time, the meeting was cancelled before it even started, because too many councillors had indicated they would not attend. According to a letter from the Speaker, Ms Dipuo Peters, she cancelled the meeting that was supposed to take place […]
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Potholes and water outages often begin with bad planning. A town planner explains seven ways South Africans can push municipalities to do better.
As many South Africans continue to feel the pressure of rising living costs, affordability is affecting popular credit products in diverse ways as consumers adapt their borrowing strategies rather than stepping away from credit altogether. The latest TransUnion Q2 2026 South Africa Industry Insights Report shows that households are becoming more selective about how they borrow, with consumers prioritising products that align with their needs while carefully managing affordability.
Acquisition Slowed as Portfolio Outcomes Diverged
Growth in retail credit originations (new accounts opened) declined across all major retail lending products during the quarter. New clothing accounts fell 7.8% year-over-year (YoY), retail instalment originations declined 10.3%, and retail revolving originations decreased 12.2%.
While all three credit products experienced lower new account volumes, the underlying customer and portfolio trends across these products tell very different stories.
Despite new account acquisition falling significantly, the clothing account portfolio continued to demonstrate stability, supported by existing customer relationships. Total credit lines increased by 12.4% YoY, outpacing balance growth of 8.0% YoY. This may reflect ongoing line management among existing customers, while the slower increase in balances suggests that consumers are using the additional capacity selectively, using only the credit they need to support day-to-day consumption in a challenging economic environment.
Clothing account performance improved slightly, with serious account-level delinquency (3+ months in arrears, or MIA) decreasing by eight basis points (bps) YoY to 26.5%. However, balance-level delinquency deteriorated by 67 bps, suggesting that repayment pressure is becoming more concentrated among customers carrying larger balances.
The retail revolving credit segment followed a different trajectory. Account volumes declined by 4.5%, the number of active consumers fell 4.4% YoY and outstanding balances decreased 1.9% YoY, indicating continued market contraction. Despite weaker acquisition (origination volumes dropped by 12.2% YoY) and lower participation, performance improved materially, with account-level delinquencies improving by 135 bps YoY to 16.0%. These trends suggest that while the portfolio may be shrinking in size, quality has improved, as tighter lending and portfolio rationalisation have yielded a more resilient borrower base.
Retail instalment lending presented yet another picture. Origination volumes declined by 10.3% YoY and the number of consumers carrying balances fell by 13.9% YoY, yet outstanding balances increased by 12.0% YoY and average balances rose by 9.8% YoY. Serious delinquency deteriorated across all measures: account-level delinquency increased by 146 bps, with similar deterioration for consumer-level and balance level delinquency, pointing to mounting repayment pressure among remaining borrowers.
For lenders, the combination of fewer consumers, higher average balances and broad-based delinquency deterioration reinforces the need to assess affordability carefully at origination and monitor existing portfolios closely for emerging signs of stress, particularly among retail instalment customers.
These trends align with findings from TransUnion’s Q2 2026 Consumer Pulse Study which showed that 52.7% of consumers said that they had cut discretionary spending in recent months, while nearly two thirds (63.4%) said that they actively sought sales and discounts when shopping, to make ends meet.
“South Africa’s retail credit market continued to fragment during the quarter under review, with clothing, retail revolving and instalment lending following increasingly different trajectories,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “While all three products experienced lower origination activity, the underlying performance and portfolio trends suggest consumers are becoming more selective in how they use retail credit and lenders are responding differently across product types. As a result, retail credit can no longer be viewed as a single market, but rather as a collection of products serving distinct consumer needs and risk profiles, each of which may be experiencing varying levels of financial strain or resilience.”
Consumers’ Mobility Choices Influenced by Long-Term Affordability
Despite new passenger vehicle sales increasing strongly during Q2 2026 according to TransUnion’s Q2 2026 Mobility Insights Report, the vehicle finance market recorded modest growth in Q2 2026, continuing to demonstrate demand despite a more challenging affordability environment. Outstanding balances increased 8.0% YoY, supported by a 5.5% YoY increase in average new loan values, while origination volumes grew modestly by 1.1% YoY. Importantly, credit performance continued to improve, with serious account-level delinquencies decreased by 115 bps, indicating that growth continues to be accompanied by relatively strong portfolio performance.
This resilience is particularly noteworthy given shifts occurring elsewhere in the automotive market. According to the Mobility Insights Report, vehicle purchase intentions softened during Q2 2026, particularly among lower- and middle-income consumers. Affordability, financing costs, fuel efficiency and total cost of ownership have become increasingly important considerations in vehicle selection.
At the same time, consumers showed growing interest in technologies that could reduce long-term ownership costs, with hybrid vehicles emerging as an increasingly attractive alternative for consumers focused on fuel efficiency and operating costs. These developments suggest that demand is being reshaped by more value and affordability considerations, rather than disappearing altogether.
“Consumers are increasingly evaluating not only whether they can finance a vehicle, but also whether they can comfortably own and operate it over the longer term. This shift is likely to influence vehicle choice, financing structures and portfolio composition as the market continues to evolve,” said Hatea.
“Affordability pressures appear to be changing the structure of demand rather than reducing participation in the market. Consumers remain interested in mobility solutions but are becoming more selective about how their needs are met. Lenders that can balance access, affordability and risk management are likely to be best positioned to support sustainable growth in the vehicle finance market,” she added.
Personal Loan Trends Continued to Diverge
South Africa’s personal loan market continued to expand during Q2 2026, but the underlying trends diverged sharply between bank and non-bank lenders. While both segments recorded growth, differences in loan size and credit performance point to distinct borrower needs and risk outcomes.
Bank personal loan originations increased 7.7% YoY, outstanding balances grew 8.9% YoY and average new loan amounts increased 9.2% YoY, indicating continued demand for larger-value unsecured credit. These gains were accompanied by improved performance, with account-level delinquency improved by 194 bps YoY to 26.5% and balance-level delinquency improved by 342 bps YoY to 29.3%. Together, these trends suggest that banks found growth opportunities among consumers with the capacity to manage larger borrowing commitments while maintaining disciplined risk management and portfolio quality.
Non-bank personal loan originations increased by 21.3% YoY and the number of consumers carrying balances rose by 12.7% YoY, significantly outpacing the bank personal loan market. However, average new loan amounts declined by 5.9%, indicating that growth was increasingly concentrated in smaller-ticket lending. This points to continued demand for accessible liquidity and short-term credit solutions, particularly among consumers seeking smaller borrowing amounts.
While this supports broader access to credit, the non-bank personal loan segment also experienced a deterioration in credit performance. Serious account-level delinquency increased by 32 bps YoY to 48.3%, while balance-level delinquency rose by 636 bps YoY to 54.6%.
Lenders across these products target different risk groups: bank personal loan originations have tilted modestly towards subprime over the last two years, reaching 56.6% in Q2 2026 compared to 53.8% two years prior. In contrast, subprime non-bank personal loan customers account for 71.3% in Q2 2026, compared to 68.3% two years prior. This suggests that banks are widening access selectively, without dramatically changing their credit posture, while non-bank lenders are servicing the highest risk, highest need consumers – a dynamic that explains the sharp divergence in delinquency trends across the two segments.
“The contrast between bank and non-bank personal lending shows why growth must be assessed alongside loan value and credit performance,” said Hatea. “Understanding which consumers are driving expansion, and whether that growth is sustainable, is becoming increasingly important for lenders.”
Table 1: Key South African Consumer Credit Market Metrics (Q2 2025 vs Q2 2026)
| Product | YoY origination growth | Serious account-level delinquency rate* | YoY basis points (bps) change in delinquency rate |
| Credit card | -16.8% | 13.1% | +22 bps |
| Bank personal loan | 7.7% | 26.5% | -194 bps |
| Non-bank personal loan | 21.3% | 48.3% | +32 bps |
| Clothing accounts | -7.8% | 26.5% | -8 bps |
| Retail instalment | -10.3% | 27.3% | +146 bps |
| Retail revolving | -12.2% | 16.0% | -135 bps |
| Home loans | -10.5% | 7.2% | -52 bps |
| Vehicle finance | 1.1% | 6.4% | -115 bps |
*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears
“For lenders, sustainable growth will depend on looking beyond volume to the affordability, risk and repayment capacity behind each credit decision,” said Hatea. “Those that can identify where consumers have the capacity to take on credit responsibly, while responding early to emerging stress, will be best positioned to grow without compromising portfolio quality."
When eight attackers heavily armed with AK-47s and pistols storm into a tavern and start shooting, killing 17 people and wounding 15 others, it should serve as a serious warning that organised armed crime is out of control in parts of Gauteng. The number of fatalities has since risen to 18. The Freedom Front Plus […]
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Green ratings are growing in South Africa, mainly for upgraded older buildings, but some low scores suggest buildings may appear greener than they are.
TransUnion South Africa says today's decision by the South African Reserve Bank's Monetary Policy Committee to increase interest rates by 25 basis points reflects ongoing concern around inflation risks and inflation expectations. However, the increase comes at a time when many households remain under significant affordability pressure.
The 25-basis-point increase adds to a range of affordability pressures that have steadily eroded purchasing power throughout 2026. While inflation has moderated, many households have yet to experience meaningful relief in their monthly finances.
According to the South African Reserve Bank's June 2026 Quarterly Bulletin, household debt-to-disposable income increased from 61.8% in Q4 2025 to 62.2% in Q1 2026, while debt-service costs remained elevated at 8.4% of disposable income.
Statistics South Africa's Quarterly Labour Force Survey reported that unemployment increased to 33.6% in Q2 2026, while youth unemployment reached 47.4%, highlighting the continued pressure on income growth and household resilience.
According to TransUnion's Q2 2026 Consumer Pulse Study, consumers continue to adapt to financial pressure through behaviourial changes. 52.7% of consumers have reduced discretionary spending, 63.4% actively seek discounts and promotions, 44.2% shop at lower-cost retailers, 38.8% expect difficulty paying future bills and loans, while a proportion are drawing down savings and increasingly relying on credit products and flexible payment solutions to manage daily expenses
"Consumers have demonstrated remarkable resilience, but affordability remains fragile and increasingly sensitive to further cost increases. Today's rate increase adds pressure to households already facing elevated fuel costs, transport expenses and ongoing affordability challenges,” says Lee Naik, chief executive officer and regional president, TransUnion Africa. “Consumers are not facing a new problem, but a deepening of pressures that already exist”
TransUnion notes that affordability pressures have intensified through much of 2026. High unemployment continues to constrain household income growth and weaken financial resilience, contributing to cautious spending behaviour and increased demand for credit.
What the Decision Means for Consumers
A 25-basis point increase is expected to raise monthly repayments on a R1 million home loan by approximately R160 to R170 per month, while repayments on a R2 million home loan could increase by around R320 to R340 per month. A consumer financing a R400,000 vehicle could see repayments increase by approximately R65 per month.
Although relatively modest in isolation, these additional costs arrive at a time when households are already contending with high living expenses and tighter budgets.
TransUnion expects consumers to respond by reducing discretionary spending, reassessing household budgets and delaying major purchases, prioritising debt obligations and essential expenses. Demand for flexible credit solutions and financial management tools may also increase as households seek to preserve cash flow.
While vehicle finance and mortgage repayment performance have remained relatively resilient, TransUnion cautions that additional monetary tightening could place renewed pressure on repayment performance, particularly within unsecured lending segments where delinquency rates remain elevated.
"South Africans have shown remarkable resilience, but affordability remains fragile. The increase reinforces the need for consumers to proactively manage debt, preserve liquidity and maintain healthy credit profiles," says Naik.
Looking Ahead
TransUnion expects affordability to remain a defining issue for consumers through the remainder of 2026. Elevated fuel and transport costs, weak economic growth, rising unemployment and pressure on household budgets are expected to continue shaping consumer spending and borrowing behaviour.
Statistics South Africa reported that GDP contracted by 0.2% in Q2 2026, while the RMB/BER Business Confidence Index fell to its lowest level since 2024, reflecting continued pressure on economic activity, employment growth and consumer confidence.
The key risk for households is not any single affordability shock, but the cumulative impact of multiple pressures occurring simultaneously, including fuel inflation, constrained income growth, elevated unemployment and increasing reliance on credit to manage day-to-day expenses.
"Whether rates remain unchanged or increase, the reality for many households remains the same: consumers are focused on preserving cash flow, protecting repayment performance and managing essential expenses in a challenging economic environment," says Naik. "Affordability will continue to shape how South Africans spend, save and borrow in the months ahead."
Despite continued fuel price pressure, rising living costs and ongoing strain on household finances, South Africans continue to prioritise vehicle ownership. According to TransUnion's Q2 2026 Mobility Insights Report, new passenger vehicle sales increased 15.8% year-on-year during the quarter, marking the strongest annual growth recorded in the past three quarters despite challenging economic conditions.
Beneath this growth, however, a significant shift is underway. Consumers are showing renewed interest in used vehicles and more affordable options as affordability becomes a more important consideration. The changing dynamics are reflected in vehicle registration patterns.
The used-to-new ratio declined from 3.2 in Q2 2025 to 2.7 in Q2 2026, indicating that new vehicles gained market share over the past year. While the ratio increased from 2.3 in Q1, the year-on-year movement confirms that the broader shift towards new vehicles remains intact.
"One of the most encouraging findings from this quarter's report is that South Africans have not stepped away from vehicle ownership despite a more challenging economic backdrop," says Ayesha Hatea, director of research and consulting at TransUnion Africa.
"What we are seeing instead is a more pragmatic consumer. Mobility remains essential, but consumers are carefully weighing affordability, financing costs, fuel efficiency and long-term ownership expenses before making purchasing decisions."
As consumers increasingly turn to used vehicles, alternative financing structures, rental models and digital purchasing journeys, the industry's risk profile is evolving alongside these opportunities. Fraud is no longer confined to traditional vehicle-finance applications. Businesses face growing exposure to identity fraud, synthetic identities, document manipulation, income misrepresentation, ownership fraud and payment fraud across multiple points of the automotive ecosystem.
Affordability Reshapes the Market
One of the clearest indicators of changing consumer priorities is the rapid rise of Chinese automotive brands. These brands now account for more than one in every five (22.4%) passenger and light commercial vehicles sold in South Africa, highlighting the growing importance of affordability, technology and overall value in purchasing decisions.
"Affordability has become one of the defining themes of South Africa's mobility market," says Hatea. "Consumers are increasingly looking for the best overall value proposition rather than simply the lowest price. Brands that combine affordability, quality, technology and lower running costs are proving particularly attractive in the current environment."
Consumers Remain Engaged but More Cautious
Data from TransUnion's Q2 2026 Consumer Pulse Survey points to a more measured outlook among households.
The proportion of consumers intending to purchase a vehicle within the next three months declined from 22% in Q1 to 19% in Q2. The decline was most pronounced among lower- and middle-income households, while purchase intent among higher-income households increased from 24% to 27%.
Importantly, this moderation should not be interpreted as weakening demand. Rather, it suggests consumers are becoming more deliberate as affordability pressures intensify.
The continued strength in vehicle sales indicates that vehicle ownership remains a priority for many South Africans. However, consumers are increasingly focused on achieving the right balance between affordability, reliability and long-term value.
Hybrid Vehicles Gain Momentum
The same practical mindset is shaping attitudes towards vehicle technology. While internal combustion engine vehicles continue to dominate the market, hybrid vehicles have emerged as the preferred route to electrification. According to the report, 45% of consumers now consider hybrid vehicles when evaluating their next purchase, making them the most attractive electrified vehicle option in South Africa.
Rising fuel costs, concerns around charging infrastructure and growing awareness of operating expenses are encouraging consumers to seek greater efficiency without compromising convenience.
"South Africa's mobility transition is likely to follow a distinctly local path. Consumers want lower running costs and greater efficiency, but practicality remains paramount. Hybrid technology offers a compelling middle ground between affordability, convenience and sustainability.”
"As automotive customer journeys become increasingly digital, businesses need to connect identity, device, behavioural and financial intelligence to distinguish legitimate customers from higher-risk activity without adding friction to the customer experience," adds Hatea.
Value Will Define the Next Phase of Growth
Despite a more challenging outlook for households and businesses, the report suggests the underlying fundamentals supporting vehicle demand remain intact.
For OEMs, dealers, financiers and insurers, future growth opportunities will increasingly depend on their ability to meet consumer expectations around affordability, convenience and efficiency. Organisations that can help consumers navigate a constrained economic environment through competitive pricing, flexible financing solutions and lower-cost mobility options will be better positioned to respond to demand.
Growth, however, must be supported by intelligent risk management. Traditional verification approaches are increasingly being complemented by layered fraud prevention capabilities that connect identity, device, behavioural, financial and regulatory signals. This helps organisations identify higher-risk activity earlier while reducing friction for legitimate customers.
"The South African vehicle market continues to demonstrate resilience, but success in the next phase of growth will depend on understanding a more selective and value-driven consumer," concludes Hatea. “The ability to deliver affordability, efficiency, trust and long-term value will increasingly determine which brands and businesses succeed in the market.”
The Freedom Front Plus (VF Plus) kept the pressure on the Mbombela Local Municipality’s Portfolio Committee on Urban Planning and Development to table the long-awaited final policy on student housing to the Council. Executive Mayor Sibongile Makushe-Mazibuko has, however, postponed the policy. This policy is crucial, as the demand for housing near institutions such as […]
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Africa still needs millions of better-paying jobs and higher productivity to reduce poverty. What has changed is the route to achieving those goals.
Prompted by concern over the intended closure of Premier Foods’ Fruits Products Western Cape (FPWC) plant in Tulbagh, the Freedom Front Plus (VF Plus) initiated talks aimed at saving the facility. This enterprise previously belonged to the Rhodes Food Group, but was acquired by Premier earlier this year and has since been trading as FPWC. […]
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The Freedom Front Plus (VF Plus) questions the discrepancy between the financial picture painted by the Ekurhuleni Metro in a recent public statement and the figures in the Metro’s unaudited financial and performance results for the fourth quarter of the 2025/26 financial year, tabled to the Council on Thursday. According to the Metro’s statement, published […]
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South African consumers are facing sustained financial strain, with nearly four in ten (39%) expecting to miss at least one bill or loan repayment, according to TransUnion’s Q2 2026 Consumer Pulse Study (CPS). Persistently high inflation continues to reshape how households spend, borrow and save, driving more cautious financial behaviour and softer optimism.
The findings point to a consumer environment marked less by recovery and more by ongoing adjustment. While many households remain financially active, their ability to absorb additional pressure is narrowing, with affordability constraints increasingly shaping everyday decisions.
“Consumers are still managing, but the margin for error is shrinking,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “Even modest increases in essential costs are forcing difficult trade-offs, which is reflected in lower confidence and more cautious credit behaviour.”
Financial Pressure Persists as Optimism Declines
Household finances remain under pressure, with mixed signals pointing to continued strain. In Q2 2026, 43% of South Africans said their household finances were better than planned, down slightly from 44% in Q2 2025. At the same time, 40% said their finances were worse than planned, pointing to persistent pressure rather than a clear recovery trend.
Forward-looking sentiment softened more noticeably. Financial optimism declined to 66%, down from 71% in Q2 2025, while pessimism increased to 19% from 15%. Income expectations also weakened, with 70% of consumers expecting their household income to increase over the next 12 months, compared to 75% a year ago.
A key driver of this shift is the widening gap between income growth and rising living costs. Only 37% of consumers believed their income was keeping up with inflation, while 41% disagreed. Inflation for everyday goods, including groceries and fuel, remained the dominant household concern, ranking among the top three worries for 79% of respondents.
This imbalance is increasingly affecting liquidity, which underscores the extent to which cost pressure continues to affect monthly cash flow and raise the risk of missed payments.
“Inflation remains the single biggest pressure point for households. Even where incomes are rising, essential costs quickly absorb that relief. This makes budgeting discipline and financial awareness more important, because households need to know where they can adjust when pressure rises,” said Hatea.
Households Cut Discretionary Spend to Stay Afloat
In response, South Africans are making practical adjustments to their household budgets. More than half of consumers (53%) said they had cut back on discretionary spending such as dining out, travel, and entertainment over the past three months. A further 28% cancelled subscriptions or memberships, while 24% cancelled or reduced digital services such as wireless, cable TV, or internet.
Debt and savings behaviour also reflect caution. Around 32% of consumers said they had paid down debt faster, 27% saved more in an emergency fund or stokvel, and 20% saved more for retirement. At the same time, 14% cut back on retirement savings, 14% increased their use of available credit, and 13% used their retirement savings, signalling that financial resilience is uneven and for some, deteriorating.
Looking ahead, consumers expect essential categories to remain under pressure. Over the next three months, 37% expect their spending on bills and loans to increase, while 33% expect higher spending on medical care and services. Around 36% expect to increase contributions to retirement funds or investments, although 16% expect to decrease spending in that category.
“These findings show how carefully households are trying to manage trade-offs. Some consumers are still building buffers and paying down debt, while others are drawing on savings or credit to get through the month. That is why the broader picture is one of sustained financial adjustment rather than simple improvement,” said Hatea.
Consumers Want Credit but Few Are Willing to Apply
Credit remains a critical financial tool, but engagement is becoming more selective. The study found that 92% of South Africans view access to credit and lending products as important to achieving their financial goals, unchanged from a year ago. Perceptions of access improved, with 45% believing they have sufficient access to credit, up from 38% in Q2 2025. Around half (50%) of consumers believe they would be approved if they applied.
However, this confidence is not translating into increased demand. Only 36% plan to apply for new credit or refinance existing credit in the next 12 months, broadly unchanged year-over-year (YoY). Among those who considered applying for credit or refinancing, 45% ultimately abandoned their plans.
Cost remains the largest barrier, cited by 30% of consumers who abandoned applications. Credit history was cited by 23%, while 22% pointed to income or employment status. This suggests that while consumers still recognise the importance of credit, many remain cautious about taking on new commitments.
“Credit demand has not disappeared, but consumers are becoming more selective about the obligations they take on. For many households, access is not only about whether credit is available. It is also about whether the cost, repayment terms and approval process feel manageable,” said Hatea.
Where consumers do plan to apply, demand is shifting toward shorter-term and more flexible products. Among those planning new credit or refinancing activity, 34% intend to apply for a new personal loan, up from the previous quarter, while 29% plan to apply for a new credit card. A further 27% plan to use buy now, pay later services.
Fraud Exposure Rising as Digital Use Expands
Digital channels are also playing an increasingly important role in financial participation. Of the 30% who said they used digital banking services, around 46% reported using a digital bank, 56% used buy now, pay later services, and 23% engaged with digital or FinTech providers. This points to continued demand for speed and convenience, alongside the need for clear, responsible credit information.
As digital financial activity grows, identity protection remains an important concern. Around 56% of consumers reported being targeted by online, email, phone call, or text message fraud attempts in the past three months.
Among those targeted, the most common schemes were vishing (34%), smishing (33%), and phishing (31%). The study also found that 26% of consumers had been notified in the past three months that details about their identity or online accounts had been compromised in a data breach.
Consumers are taking some protective steps. In the past 60 days, 53% changed passwords because of cybersecurity concerns, 37% checked their credit reports, and 12% purchased internet security, anti-virus, or anti-malware protection. Yet uncertainty remains a barrier. Among consumers who took no action despite cybersecurity concerns, 56% said they were overwhelmed by what to do.
“As digital financial participation increases, security becomes a core part of financial confidence. Consumers need clear, practical guidance on how to protect their information and respond effectively when risks arise,” said Hatea.
Consumers Seek Control Amid Ongoing Financial Strain
Despite ongoing challenges, South African consumers remain financially engaged and active. Around 34% monitor their credit reports monthly, 13% weekly, and 6% daily. More than half (52%) believe their credit score would improve if businesses used information not found on standard credit reports, such as rental payments, short-term loan history, and buy now, pay later loans.
This reflects a broader shift toward financial visibility, as consumers look for tools and information to better manage their financial position in an uncertain environment.
The Q2 2026 Consumer Pulse Study highlights a market that is resilient but increasingly constrained. Households are adjusting spending, managing debt carefully, and seeking greater control, but persistent cost pressures are testing their capacity to absorb shocks.
“Consumers are doing their best to stay in control in a difficult environment,” Hatea concluded. “For lenders and financial service providers, the opportunity lies in supporting that effort, through transparent pricing, responsible access to credit, and tools that help consumers anticipate and manage financial stress before it escalates.”.
Consumers can get their free annual credit report from TransUnion here.
Youth employment programmes need to be built around real jobs, capable institutions and the young people they are meant to serve.
Nigeria’s housing policies have failed to meet the needs of its federal capital residents.
Music created the networks, identities and spaces of trust that made collective political action possible in Sudan’s 2019 revolution.
South African consumers are reshaping how they access and use credit as affordability pressures persist, according to TransUnion’s Q1 2026 South Africa Industry Insights Report. The report’s findings show that credit demand remained resilient, but diverging risk dynamics are increasingly evident across products and providers. Consumers are relying more heavily on existing credit facilities while also shifting toward more accessible lending options that are typically employed by higher risk borrowers to manage short-term liquidity needs.
Diverging Trends in Bank and Non-Bank Personal Loans
Personal loan markets continued to show distinctly different trajectories during the quarter. Bank personal loan originations recorded modest growth of 2.5% YoY, while the number of active accounts increased by 1.4% over the same period. Looking below this headline growth reveals a shift in lending mix by borrower risk profiles, with below-prime originations rising by 5.0% while prime and above segments declined by 3.8%. Gen Z participation also increased significantly, with originations among this segment rising 21% YoY, bringing their share to 23% (up from 19.5% in Q1 2025) of total bank personal loan originations.
Credit performance improved in the bank personal loan segment, as account-level delinquencies (3+ months in arrears, or MIA) decreased by 256 basis points to 26.7%. This reflects tighter underwriting, portfolio stabilisation, and improved repayment behaviour following earlier periods of financial stress.
In contrast, non-bank personal loans continued to expand rapidly. Originations grew by 19.0% YoY, while active accounts increased by 27.6%. This growth was driven largely by younger consumers, with Gen Z accounting for 53% of originations in the quarter.
At the same time, lending dynamics for non-bank personal loans have evolved. Declining average loan sizes and balances point to a shift toward smaller value and more frequent borrowing patterns. This reflects a combination of lender appetite for smaller, shorter-term exposure and continued consumer demand for accessible liquidity, with these products increasingly used to support short-term cash flow needs rather than larger, structured borrowing.
However, this rapid growth has been accompanied by rising risk. Account-level delinquencies increased by 193 bps to 49.8%, with delinquency levels now approaching half of all active non-bank personal loans. This highlights elevated stress within the segment and points to increasing pressure among higher-risk borrowers.
“Bank personal loans are entering a more stable phase characterised by controlled growth, targeted expansion into younger and moderate-risk segments and improved credit performance,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “While non-bank personal loans are expanding financial inclusion and access to liquidity, this growth is being driven by higher-risk and more financially vulnerable segments experiencing rising credit stress, raising important considerations around sustainability and risk management.”
Reliance on Credit Cards Increased as Repayment Pressure Grew
The credit card market also showed a clear shift in growth dynamics, with balance expansion increasingly driven by existing accounts rather than new cards issuance. Originations volume declined by 9.5% YoY, alongside a 4.1% YoY reduction in average credit limits, reflecting a more cautious lending environment.
Despite this, outstanding balances grew by 8.8% YoY, supported by increased utilisation as well as emerging repayment pressure which reduced card repayment levels. The number of active consumers rose by 6.4%, while average balances per account increased by 2.5%.
Delinquencies also rose YoY, with account-level delinquencies increasing by 66 basis points to 13.6%, while delinquent balances increased by 16% YoY. As a consequence of increased delinquencies, lower repayment levels contributed to the rise in total account balances over the past year.
“While increased utilisation is contributing to balance growth, the faster rise in delinquent balances indicates that repayment pressure is becoming a more persistent driver,” said Hatea. “Credit cards are playing a dual role in the current environment. They are both a liquidity tool, supporting short-term cash flow needs, and a channel where financial pressure is becoming more visible through rising delinquency.”
Resilient Demand for Vehicle Asset Finance Supported by Increased Access to New Vehicles
Vehicle finance continued to demonstrate steady growth, supported by strong participation from younger consumers. Gen Z and Millennials now account for two-thirds (66%) of all originations, which increased by 11.6% YoY. This reflects sustained demand for mobility while highlighting the growing role that first-time and early-life stage borrowers play in sustaining market activity.
At the same time, there is a clear shift in the composition of financing, with the ratio of used to new vehicles declining to 0.93. This indicates that more new vehicles are now being financed than used, structurally elevating average origination values. Notably, this trend occurred even as more affordable new entrants, particularly Chinese brands, gained traction in the market, with one in five vehicles sold now coming from these manufacturers.
On the risk side, subprime originations have increased significantly, rising by over 33.5% YoY and now accounting for a quarter (25%) of all new vehicle finance. This suggests that growth is increasingly being driven by higher-risk segments, as lenders balance expansion with the need to sustain volumes.
Despite this increase in borrowing by riskier consumers, repayment performance improved, with account-level 3+ MIA delinquencies declining by 80 bps to 7.1%, indicating relatively strong borrower management of vehicle loans.
“Overall, the vehicle asset finance market reflects a complex but resilient environment. Demand remains strong, supported by younger consumers and improved access to new vehicles. However, rising exposure to higher-risk borrowers and increasing loan sizes will require enhanced early risk detection tools going forward to enable mobility and inclusion,” said Hatea.
Table 1: Key South African Consumer Credit Market Metrics (Q1 2025 vs Q1 2026)
|
Product |
YoY origination growth |
Serious account-level delinquency rate* |
YoY basis points (bps) change in delinquency rate |
| Credit card |
-9.5% |
13.6% |
+66 bps |
| Bank personal loan |
2.5% |
26.7% |
-256 bps |
| Non-bank personal loan |
19.0% |
49.8% |
+193 bps |
| Clothing accounts |
11.0% |
26.2% |
-1 bps |
| Retail instalment |
-1.7% |
26.6% |
-89 bps |
| Retail revolving |
-7.1% |
16.8% |
-126 bps |
| Home loans |
11.4% |
7.7% |
+10 bps |
| Vehicle finance |
11.6% |
7.1% |
-80 bps |
*Account-level serious delinquency rate, measured as a percentage of accounts three or more months in arrears
“South Africa’s Q1 2026 insights highlight a credit landscape that remains active but increasingly segmented. While demand for credit persists, affordability constraints are reshaping how consumers borrow, with greater reliance on short-term liquidity and higher-risk products,” said Hatea. “These trends underscore the need for lenders to balance growth with prudent risk management while supporting sustainable access to credit across the market.”
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South Africa’s passenger vehicle market remained resilient in the first quarter of 2026, but demand is evolving. Rising affordability pressures, higher fuel costs, the growth of Chinese brands and shifting powertrain preferences are reshaping the automotive landscape.
According to TransUnion’s Q1 2026 Mobility Insights Report, passenger vehicle sales reached 114,517 units in Q1 2026, slightly higher than the 114,246 units recorded in Q4 2025. Year-on-year (YoY) growth eased to 12.6%, down from the stronger performance seen during parts of 2025, but demand remained elevated despite a more uncertain macroeconomic environment.
A Stronger Start, But Growing External Pressures
The report, which provides a first quarter overview, indicates that South Africa entered 2026 on a stronger economic footing. This was supported by easing inflation, lower interest rates over the previous year, reduced load-shedding, and improved financial conditions.
However, rising geopolitical tensions in the Middle East and the associated oil price shock have heightened downside risks. In March 2026, inflation increased from 3.1% to 4.0% in April 2026, while the Monetary Policy Committee (MPC) recently raised the prime lending rate by 25-basis points in May 2026. Combined with higher fuel and transport costs, these factors are expected to place renewed pressure on affordability and consumer spending.
“Vehicle demand has not collapsed, but the market is moving into a more selective phase,” said Ayesha Hatea, director of research and consulting at TransUnion South Africa. “Consumers are still buying vehicles, but affordability is no longer only about the purchase price. Fuel costs, financing costs, insurance, servicing, and total cost of ownership are becoming central to the decision.”
Residual Value and the True Cost of Ownership
The report found that residual values are becoming an increasingly important component of vehicle affordability. As finance terms extend beyond six years for many buyers, depreciation and resale performance play a growing role in ownership economics, giving brands that retain value more effectively a competitive advantage.
The shift towards longer financing terms and the use of balloon structures reflects a growing focus on monthly affordability and cash-flow flexibility. However, this trend also increases exposure to residual value risk. Where vehicle values underperform expectations, consumers may face refinancing pressure or negative equity at trade-in, making used vehicle market performance an increasingly critical consideration.
Chinese Brands Reshape the Competitive Landscape
One of the most notable structural shifts is the continued rise of Chinese automotive brands. Chinese car sales grew by 75% YoY in Q1 2026, significantly outpacing traditional OEM growth of 2% and the broader passenger and light commercial vehicle (LCV) market growth of 12.7%. As a result, Chinese brands accounted for more than 19% of new passenger and LCV sales nationally, meaning nearly one in five new vehicles sold in South Africa was from a Chinese manufacturer in Q1 2026.
The shift is no longer driven solely by entry-level pricing. Chinese brands are increasingly competing on technology, features, fuel efficiency, range, warranty offerings, and perceived long-term value. On a combined portfolio basis, Chery Group, including Chery, Jetour, Omoda, and Jaecoo, recorded combined sales of 16,094 units in Q1 2026, positioning itself as a top three automotive player.
“Chinese brands have moved beyond the role of price disruptors. They are becoming structural industry players, influencing dealer networks, financing ecosystems, ownership perceptions, and the wider discussion around localisation and industrial competitiveness,” said Hatea.
Diverging Trends Across New and Used Markets
The new and used vehicle markets continued to show differing trends. NaTIS data indicates that new vehicle registrations increased by 11.6% YoY in Q1 2026, marking a sixth consecutive quarter of double-digit growth. In contrast, used vehicle registrations increased by 2.6%, suggesting a modest recovery in the secondary market, although it still trails the stronger momentum seen in new vehicle sales.
The used-to-new registration ratio declined to 2.3 in Q1 2026, the lowest level recorded over the reporting period. While used vehicles still make up the majority at 69% of total registrations, the share of new vehicles has risen to 31%, up from 23% in Q4 2025. This shift has been supported by favourable pricing dynamics, with new vehicle inflation falling to 0.8%, while used vehicle prices remained in deflation at -1.3%.
Confidence Rises, But Caution Remains
Dealer sentiment also reflects the stronger demand environment. New vehicle dealer confidence increased to 67 in Q1 2026, its highest level in 13 years. However, the report cautions that increasing fuel costs, inflation risk, and rising operating expenses could create more challenging conditions in the quarters ahead.
Forward-looking consumer data remains constructive. TransUnion’s Consumer Pulse Survey found that consumers likely to purchase a vehicle in the next few months increased from 19% in Q4 2025 to 22% in Q1 2026. Short-term purchase intent is strongest amongst younger consumers, with 26% of Gen Z and 24% of Millennials indicating plans to buy.
A Gradual Shift in Powertrain Preferences
Powertrain preferences are also evolving. Internal combustion engine vehicles remain the most popular choice, preferred by 49% of consumers in Q1 2026. However, interest in hybrid electric vehicles has grown significantly to 39%, up from 30% in Q4 2025, making hybrids the leading electrified option. Interest in both battery electric vehicles and plug-in hybrids also increased, with each reaching 26%.
“Hybrids are emerging as a practical transition pathway for South African consumers. They offer fuel savings and lower running costs without full dependence on charging infrastructure, which makes them relevant in a market where affordability and operating certainty remain critical,” said Hatea.
A Market Entering Its Next Phase
While domestic demand continues to support the industry, passenger vehicle exports remain under pressure amid trade uncertainty, geopolitical disruption, protectionism, and changing decarbonisation requirements.
“The South African automotive market is not reverting to its previous structure. The next phase will be defined by affordability, value, access to finance and how effectively industry players respond to evolving consumer behaviour,” said Hatea.
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