Ongoing subdued household credit and mortgage balances growth

Posted On Friday, 30 June 2017 13:27 Published by
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Ongoing subdued household credit and mortgage balances growth.

The value of outstanding credit balances in the South African household sector increased by 2,8% year-on-year (y/y) to a level of R1 508,2 billion in the first five months of 2017, which was the combined result of continued low growth of 2,3% y/y in secured credit balances and growth of 4,6% y/y in unsecured credit balances over this period.  

Household secured credit balances (R1 155,3 billion and 76,6 % of total household credit balances) increased by 2,3% y/y up to the end of May, unchanged from end-March and endApril, but down from 3,7 % y/y at end-May last year. The unabated low year-on-year growth in secured credit balances was the result of continued subdued growth in household mortgage balances (see below), while instalment sales balances (21,5% of total household secured balances and mainly related to vehicle finance) showed no growth on a year-on-year basis in the 5-month period up to end-May.  

Growth in household unsecured credit balances (R352,8 billion and 23,4% of total household credit balances) came to  4,6% y/y in the period January to May this year. The component of general loans and advances balances (58,5% of total household unsecured credit balances and largely consisting of personal loans and micro finance) increased by 5,3 % y/y by end-May.  

The value of outstanding private sector mortgage balances (R1 311,8 billion and 39,1% of total private sector credit balances of R3 352,4 billion), comprising both corporate and household mortgage balances, showed growth of 4,6% y/y at the end of May this year. Corporate mortgage balances (R407,1 billion and 31% of total private sector mortgage balances) increased by 8,2% y/y in the five months up to end-May. Outstanding household mortgage balances (R904,7 billion and 78,3% of total household secured credit balances and 69% of total private sector mortgage balances) increased by 3% y/y up to the end of May. 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.   

The South African economy is forecast to grow at a much subdued rate of 0,6% in 2017, which is below the potential real growth rate of 1,4%, as calculated by the Reserve Bank. In view of projected low economic growth, tough labour market conditions, pressure on household finances and low consumer confidence, growth in household credit balances, including mortgage balances, is to remain largely subdued up to year-end. 

Last modified on Friday, 30 June 2017 16:05

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