Household credit and mortgage balances growth up on base effects

Posted On Wednesday, 30 September 2015 12:22 Published by
Rate this item
(0 votes)

Household credit and mortgage balances growth up on base effects .

Credit_Balances_Sept2015

The value of outstanding credit balances in the South African household sector increased by 4,2% year-on-year (y/y) up to the end of August 2015, with growth rising above the 4% level for the first time since July last year. This was the result of faster growth in the components of mortgage balances, overdrafts and general loans and advances, whereas growth in instalment sales balances dropped to its lowest level since May 2010.  

Growth in the value of household secured credit balances (R1 098,9 billion and 75,8% of total household credit balances) was up to 3,4% y/y at end-August from 2,9% y/y at the end of July, supported by an uptick in mortgage balances growth. However, growth in instalment sales balances, 22,2% of household secured balances and largely related to vehicle finance, continued to slow down to a level of only 2,9% y/y in the eight-month period up to the end of August. The downward trend in instalment sales balances growth is in line with new vehicle sales contracting by 3,3% y/y in the first eight months of the year.  

Household unsecured credit balances (R350,8 billion and 24,2% of total household credit balances) recorded growth of 6,8% y/y at end-August, up from 5,9% y/y the end of July. The acceleration in growth in unsecured balances was largely the result of some base effects from a year ago in some components. Growth in general loans and advances (60,6% of unsecured balances and mainly comprising personal loans and micro finance) increased to 6,0% y/y at end-August from 5,6% y/y at end-July. Growth in overdraft balances, with a share of 10,7% in unsecured balances, increased from 0,4% y/y at the end of June to 4,7% y/y at end-July and 10,0% y/y at the end of August, mainly driven by base effects. 

Private sector mortgage balances, consisting of both commercial and residential mortgages, saw growth of 5,3% y/y up to the end of August this year. The value of outstanding household mortgage balances increased to R852,5 billion in the first eight months of the year, showing growth of 3,5% y/y over this period. The jump in year-on-year growth from 2,8% at the end of July came against the background of the base effect of a drop in the outstanding balance in August last year from July. The value of outstanding mortgage balances is the net result of all property transactions related to mortgage loans, including additional capital amounts paid into mortgage accounts and extra monthly payments above normal mortgage repayments.  

Trends in and prospects regarding the economy, household finances and consumer confidence will remain important in the demand for and growth in household credit and its various components. Lending rates are forecast to rise again before year-end and in 2016, which will affect the affordability of credit and consumer finances over a wide front. Against this background, growth in household credit balances, including mortgage balances, is forecast to remain well in single digits in the rest of the year and through next year.

Last modified on Wednesday, 30 September 2015 13:11
" "

Most Popular

Equites Property Fund to list on A2X

Jun 25, 2019
ANDREA TARVENA
Equites Property Fund Limited has been approved for a secondary listing on A2X Markets…

McCormick Property Development Celebrates the Opening of Katale Square

Jun 29, 2019
 JASON MCCORMICK
McCormick Property Development celebrated the launch of its 66th development with the…

New standard bank deal will make it easier for self-employed professionals to qualify for the mortgage bonds

Jul 03, 2019
 STANDARD BANK
Ever since the tightening of credit rulings in the South African economy which followed…

Hyprop reduces exposure to Africa and provides pre-close update

Jun 29, 2019
MORNE WILKEN
JSE specialist shopping centre REIT, Hyprop, today announced progress on its strategy…

Twin City to develop new R230m mall in Vryburg, North West

Jul 10, 2019
 TWIN CITY
The North West agricultural town of Vryburg is set to get its first enclosed shopping…

Please publish modules in offcanvas position.