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South African short-term lender Wonga said yesterday it noted significant changes in the credit market, with applicants for short-term loans appearing to be less in debt than a year ago.
James Williams, Wonga’s chief marketing officer, said there was an emerging model. Even though applicants for short-term loans appeared to be less indebted than a year ago, that did not necessarily mean that their access to credit was improving.
Analysis of anonymous loan application data collected during the first quarter indicated that applicants’ debt levels have declined. “During the first quarter of 2021, we saw a 9% drop in the number of applicants with unpaid debts on more than one account year over year,” said Williams.
“Additionally, our data also reflects that this year there was a 1% decrease in a claimant’s debt-to-income ratio from 2020, in addition to a 3% decrease in defaults.”
Wonga’s analysis noted that although applicants’ average net income recovered by 6% from the first quarter of last year, there was a 17% drop in applicants with one or more other loans. short-term assets on their credit report compared to last year.
Wonga said these results indicated that while there appeared to be a better-than-expected recovery among clients who appeared to be less indebted, lenders continued to carefully monitor their risk when issuing credit, which affected the ability of creditors. consumers to access unsecured loans.