Year-on-year growth in the value of outstanding credit balances in the South African household sector came to 9,3% in the first ten months of 2012, up from 9,1% as at the end of September. With growth in household mortgage balances remaining subdued, the components of household instalment sales and unsecured credit continued to drive growth in total household credit balances. 

Growth in instalment sales balances (15,1% share in total household credit balances) was 19,5% year-on-year (y/y) at the end of October, with growth in unsecured credit balances (21,6% share) at 26,9% y/y over the same period.

Private sector mortgage balances, comprising both commercial and residential mortgage loans, showed growth of 1,9% year-on-year (y/y) up to the end of October. The value of outstanding
household mortgage balances increased by 3% y/y to R792,1 billion in the first ten months of 2012.

The share of outstanding household mortgage balances in total household credit balances continued to decline, reaching a level of 62,6% at the end of October. The further decline in the
share of household mortgage balances is the result of continued low growth in this component of total credit balances, while strong growth is still evident in instalment sales and unsecured credit balances, causing the share of these components to be on an upward trend.

The forecast is for year-on-year growth in mortgage balances to remain in single digits up to the end of 2012 and in 2013, based on trends in and the outlook for the economy, household finances and consumer confidence. Interest rates are projected to remain low over the next 12 months against the background of economic prospects and consumer price inflation to stay within the inflation target range of 3% to 6%, despite some upward pressure in the short term. Low interest rates for longer will continue to support the property market and the affordability of mortgage finance.