Credit and mortgage balances in the first half of 2019

Posted On Wednesday, 31 July 2019 17:49 Published by
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Credit and mortgage balances in the first half of 2019, with divergent home loan repayment patterns evident across household income categories up to mid-2019.

 Jacques_Du_Toit_Absa_Home_Loans

The value of outstanding credit balances in the South African household sector (R1 677,1 billion) showed growth of 6,2% year-on-year (y/y) to the end of June 2019, marginally up from 6,1% y/y at the end-May when the outstanding balances were R1 669,3 billion.

Household secured credit balances (R1 266,6 billion and 75,5% of total household credit balances), which includes mortgage, leasing and instalment sales balances, increased at a rate of 4,8% y/y in the 6-month period up to end-June, which was marginally down from 5% y/y at end-April and 4,9% y/y at end-May. Mortgage balances growth was also slightly lower at end-June from end-May (see below). Growth in instalment sales balances (R286,2 billion and 22,6% of total household secured credit balances) tapered off to 7,3% y/y at end-June from 7,5% y/y at end-May and 8,3% y/y at end-April.

Growth in household unsecured credit balances (R410,4 billion and 24,5% of total household credit balances) accelerated further to 10,4% y/y at end-June from 9,7% y/y at end-May. Growth in general loans and advances growth accelerated to 11% y/y, with credit card balances rising to 11,3% y/y, whereas overdraft balances growth was down to 5,4% y/y at the end of June from 7,6% y/y at end-May.

Outstanding private sector mortgage balances (R1 447,1 billion and 38,3% of total private sector credit balances of R3 782,6 billion), which include both corporate and household mortgage balances, showed growth of 4,9% y/y up to end-June. Growth in the value of outstanding household mortgage balances (R979,7 billion and 77,3% of total household secured credit balances and 67,6% of total private sector mortgage balances) came to 4,1% y/y at end-June. The value of 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.

Growth in household credit is forecast at 5,9 % for the full year, with mortgage balances growth projected at 4,3%, driven by trends in and prospects for the economy, household sector finances and consumer confidence. Lending rates were cut by 25 basis point in July, with prime and variable mortgage interest rates currently at 10% per annum. The lower mortgage rate will support the residential property sector and mortgage market in terms of lower monthly loan repayments. These factors will also affect home loan repayment patterns, with the trends during the past few years presented on the last page of the report.

Last modified on Wednesday, 31 July 2019 17:59
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