Uptick in household credit balances growth in 2017 from 2016

Posted On Friday, 02 February 2018 11:34 Published by
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The value of outstanding credit balances in the South African household sector increased by 3,8% to R1 542,8 billion in 2017, up from a low of 0,7% in 2016.

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The much subdued 2016 growth rate was to some extent impacted by African Bank statistics in respect of especially unsecured credit (see explanatory note in this regard). Growth in both secured and unsecured credit balances improved in 2017 from 2016.

Growth in the value of household secured credit balances (R1 185,9 billion and 76,9% of total household credit balances) increased to 4,1% in 2017 compared with growth of 2,3% in 2016. The uptick in growth in secured balances in 2017 came on the back of somewhat higher growth in household mortgage balances, whereas instalment sales balances (22% of household secured balances and largely related to vehicle finance), showed growth of 6,5% last year compared with a contraction of 0,7 in 2016.

Household unsecured credit balances (R356,9 billion and 23,1% of total household credit balances) increased by 3,1% last year after a contraction of 4,2% in 2016, which was related to African Bank data that impacted the general loans and advances component (mainly personal loans and micro finance) of unsecured credit balances. Growth in outstanding credit card balances, after contracting by 1,2% in 2016, increased by 3,8% in 2017, which also contributed to the growth in overall household unsecured credit balances last year.

The value of outstanding household mortgage balances increased by 3,5% to R923,2 billion in the 12-month period up to end-December last year, compared with growth of 3,2% in 2016. The still relatively low mortgage balances growth in 2017 was related to trends in household finances, low consumer confidence and a subdued performance by the residential property market last year. Nominal house price growth of around 4% was recorded in 2017, with various indicators of market activity that pointed to ongoing relatively tough conditions. 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 by 1,4% in 2018, with headline consumer price inflation projected at about 5% and interest rates currently expected to show little, if any, change this year. In view of these expectations, growth in household credit balances, including mortgage balances, is forecast at around the 3,5% level in 2018.

 

 

Last modified on Friday, 02 February 2018 12:18

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