Continued stable growth in household credit and mortgage balances

Posted On Friday, 31 May 2019 12:20 Published by
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Growth in the value of outstanding credit balances in the South African household sector (R1 660,9 billion) remained relatively stable in the first four months of 2019, recorded at 6% year-on-year (y/y) at the end of April this year.

Jacques_Du_Toit_Absa_Home_Loans

Household secured credit balances (R1 255,5 billion and 75,6% of total household credit balances), which includes mortgage, leasing and instalment sales balances, showed growth of 5% y/y in the 4-month period up to end-April (4,9% y/y at end-March). Mortgage balances growth was only marginally lower at end-April (see below), whereas growth in instalment sales balances (R284,1 billion and 22,6% of total household secured credit balances) improved to 8,3% y/y from 7,5% y/y at end-March.

Growth in household unsecured credit balances (R405,5 billion and 24,4% of total household credit balances) was recorded at 9,4% y/y at end-April. General loans and advances growth came to 9,7% y/y at the end of April, with credit card balances also rising by 9,7% y/y and overdraft balances increasing by 7,3% y/y.

The value of outstanding private sector mortgage balances (R1 431,2 billion and 38% of total private sector credit balances of R3 771 billion), which include both corporate and household mortgage balances, increased by an unchanged 4,6% y/y up to end-April. Growth in the value of outstanding household mortgage balances (R969,7 billion and 77,2% of total household secured credit balances and 67,8% of total private sector mortgage balances) came to 4% y/y at end-April, which was slightly down from 4,1% y/y at end-March. 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 household credit balances, including mortgage balances, will continue to be driven by developments in and prospects for the economy, household sector finances, consumer confidence and banks’ risk appetites and lending criteria. Growth in household credit balances is forecast at 5,5% for the full year, with growth in household mortgage balances projected at 4,5% y/y by the end of the year. Interest rates are forecast to be cut by 25 basis points at the next Monetary Policy Committee meeting in July, which will be supportive of the residential property market regarding market activity, transaction volumes, property price growth and the demand for and growth in mortgage finance.

Last modified on Friday, 31 May 2019 12:29
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