Uptick in household credit and mortgage balances growth

Posted On Thursday, 28 February 2019 13:41 Published by
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Growth in the value of outstanding credit balances in the South African household sector, which amounted to R1 641,5 billion, increased further to 5,9% year-on-year (y/y) at end January from 5,7% y/y at end-December and 3,7% the end of January last year.

 Jacques_Du_Toit_Absa_Home_Loans

Growth in both household secured and unsecured credit balances remained on a gradual upward trend up to January. 

The value of household secured credit balances (R1 244,4 billion and 75,8% of total household credit balances), which includes mortgage, leasing and instalment sales balances, increased by

4,8% y/y up to end-January. Mortgage balances growth was marginally higher up to the end of January (see below), whereas growth in instalment sales balances (R280,2 billion and 22,5% of total household secured credit balances) increased to 7,7% y/y up to January. 

Household unsecured credit balances (R397,1 billion and 24,2% of total household credit balances) accelerated further to 9,6% y/y up to end-January from 9,3% y/y at the end of December and 3,2% y/y in January last year. Growth in all three components of unsecured credit balances, i.e. general loans and advances, credit cards and overdrafts, remained on an upward trend over the past twelve months. 

Outstanding private sector mortgage balances (R1 414,8 billion and 38,4% of total private sector credit balances of R3 683,3 billion), which include both corporate and household mortgage balances, increased by 4,6% y/y up to end-January. The value of outstanding household mortgage balances amounted to R962,6 billion (77,4% of total household secured credit balances and 68% of total private sector mortgage balances) and was up by 4,1% y/y at end-January (4% y/y at end-December). 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. 

In view of expected higher economic growth and a consumer price inflation rate of below 5%  in 2019, as well as stable interest rates up to late this year, growth in household credit balances, including mortgage balances, is forecast to continue along the steady upward trend of the past year. Against the background of broad economic trends in the fourth quarter of 2018, property market sentiment remained positive and improved during the quarter, with the prospect of rising somewhat further during the course of the year. 

Last modified on Thursday, 28 February 2019 13:47

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