Household credit increases 2.8% on back of low growth
The value of outstanding credit balances in the South African household sector increased by 2.8% year-on-year (y/y) to a level of R1,508 billion in the first five months of 2017, according to Absa’s latest report on credit and mortgage advances.
This was the combined result of continued low growth of 2.3% y/y in secured credit balances and growth of 4.6% y/y in unsecured credit balances over this period, the bank said.
“The South African economy is forecast to grow at a much subdued rate of 0.6% in 2017, which is below the potential real growth rate of 1.4%, as calculated by the South African Reserve Bank,” said Jacques du Toit, Property Analyst at Absa.
“In view of projected low economic growth, tough labour market conditions, pressure on household finances and low consumer confidence, growth in household credit balances, including mortgage balances, is to remain largely subdued up to year-end.”
Total mortgage balance
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 value of outstanding private sector mortgage balances (R1,311.8 billion and 39,1% of total private sector credit balances of R3,352.4 billion), comprising both corporate and household mortgage balances, showed growth of 4,6% y/y at the end of May this year, noted the report.
Further breaking down the private sector, Corporate mortgage balances (R407.1 billion and 31% of total private sector mortgage balances) increased by 8,2% y/y in the five months up to end-May.
In comparison, outstanding household mortgage balances (R904.7 billion and 78,3% of total household secured credit balances and 69% of total private sector mortgage balances) increased by 3% y/y up to the end of May.
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