Further uptick in household credit and mortgage balances growth

Posted On Thursday, 30 August 2018 11:46 Published by
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Growth in the value of outstanding credit balances in the South African household sector was on a rising trend in the first seven months of 2018, with these balances amounting to a total of R1 587,5 billion at the end of this period.

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Both secured and unsecured credit balances growth accelerated further up to July, which contributed total household credit balances growth rising to 4,8% year-on-year (y/y) in the 7-month period, from 3,7% y/y at end-January. The value of household secured credit balances (R1 214,3 billion and 76,5% of total household credit balances), which includes mortgage, leasing and instalment sales balances, increased by 4,3% y/y up to end-July.

Mortgage balances growth increased somewhat further up to July (see below), with growth in instalment sales balances (R268,3 billion and 22,1% of total household secured credit balances) rising to 6,6% y/y in the seven months to July from 5,4% y/y at end-January. The value of household unsecured credit balances (R373,2 billion and 23,5% of total household credit balances) increased by 6,3% y/y up to the end of July from 5,8% y/y up to end-June and 3,2% y/y at the end of January this year.

The largest component of household unsecured credit balances, namely general loans and advances (mainly personal loans and micro finance and with a share of 58,8%), increased by 6,1% y/y to R219,4 billion up to the end of July. Outstanding private sector mortgage balances (R1 384,8 billion and 39,2% of total private sector credit balances of R3 534,9 billion), which include both corporate and household mortgage balances, showed growth of 4,7% y/y in the 7-month period up to end-July. Growth in corporate mortgage balances (R440,6 billion and 31,8% of total private sector mortgage balances) was on a gradual slowing trend from 8,3% y/y at end-April this year to 6,9% y/y by end-July.

Growth in outstanding household mortgage balances (R944,2 billion, with a share of 77,8% in total household secured credit balances and 68,2% in total private sector mortgage balances) came to 3,7% y/y at end-July from 3,6% y/y at end-June and a recent low of 3,1% y/y at endMarch this year. 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. Against the background of trends in and prospects for the economy, household finances and consumer confidence, household credit balances are forecast to show growth of around 4,5% for the full year of 2018, with household mortgage balances growth projected at about 3,5% for the year.

Last modified on Thursday, 30 August 2018 11:58
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