South African households face escalating financial pressures, with residential mortgage defaults surging to over 6% of all home loans—almost double the historical average—marking a 36% year-on-year increase in 2024. The Reserve Bank’s Financial Stability Review highlights that since November 2021, cumulative interest rate hikes of 475 basis points have pushed borrowing costs to unsustainable levels for many. Monthly repayments on a R1.5 million home rose by R4,600 before the Reserve Bank began cutting rates in late 2024.

Non-performing loans (NPLs) also climbed significantly, increasing from R257 billion in March 2023 to R304 billion by July 2024, with the NPL ratio rising from 4.7% to 5.7%. Debt-servicing costs peaked at 9.2% of disposable income in early 2024 before stabilising slightly at 9% in the second quarter. However, financial distress remains acute, especially for first-time homebuyers who purchased during the pandemic’s low-interest-rate environment.

The National Credit Regulator reports that 36% of the nearly 28 million credit-active consumers in the first quarter of 2024 had impaired records, reflecting broader financial instability. Rising costs of living have forced many to turn to credit cards and personal loans to cover basic expenses like food and housing, while others skip insurance payments or halt retirement contributions.

The Prudential Authority warns that mortgage defaults, coupled with increased reliance on high-interest debt, threaten the financial stability of households and the broader economy, necessitating continued vigilance in monetary policy to balance inflation control with economic resilience.