Marginal uptick in household credit and mortgage balances growth

Posted On Saturday, 29 June 2019 10:39 Published by
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Growth in the value of outstanding credit balances in the South African household sector (R1 669,6 billion) was only slightly higher at 6,1% year-on-year (y/y) at the end of May 2019 from 6% y/y at end-April when outstanding balances came to R1 660,9 billion.

 Jacques Du Toit Absa Home Loans

Household secured credit balances (R1 261,8 billion and 75,6% of total household credit balances), which includes mortgage, leasing and instalment sales balances, increased at a rate of 4,9% y/y in the 5-month period up to end-May (5% y/y at end-April). Mortgage balances growth was somewhat higher at end-April from end-March (see below), whereas growth in instalment sales balances (R285,2 billion and 22,6% of total household secured credit balances) came to 7,5% y/y at end-May (8,3% y/y at end-April).

Growth in household unsecured credit balances (R407,9 billion and 24,4% of total household credit balances) was recorded at 9,8% y/y at end-May, up from 9,4% y/y at end-April. Growth in all three segments of unsecured balances accelerated somewhat up to end-May, with general loans and advances growth that came to 10,2% y/y (9,7% y/y at end- April, credit card balances rising by 9,9% y/y (9,7% y/y at end-April) and overdraft balances increasing by 7,6% y/y (7,3% y/y at end-April).

The value of outstanding private sector mortgage balances (R1 439,3 billion and 38,2% of total private sector credit balances of R3 772,3 billion), which include both corporate and household mortgage balances, was up by 4,7% y/y up to end-May. Growth in the value of outstanding household mortgage balances (R974,9 billion and 77,3% of total household secured credit balances and 67,7% of total private sector mortgage balances) came to 4,2% y/y at end-May, which was up from 4,0% y/y at end-April. 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.

Based on current trends in and the short term outlook for the economy, household finances and consumer confidence, growth in household credit balances, including mortgage balances, is expected to largely remain in the rest of the year around levels seen in the first few months of the year. However, an expected cut of 25 basis points in lending rates at the next Monetary Policy Committee meeting in July will underpin the residential property market and the demand for and growth in mortgage finance.

Last modified on Saturday, 29 June 2019 10:45

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