The value of outstanding credit balances in the South African household sector recorded growth
of 9,9% year-on-year (y/y) at the end of 2012, up from 6,3% y/y as at the end of 2011. The
growth of almost 10% in household credit balances ending 2012 was largely driven by the
components of instalment sales and unsecured credit, with mortgage balances growth that
remained subdued. Growth in instalment sales balances (15,3% share in total household credit
balances) came to 19,5% y/y at the end of December last year, with growth in unsecured credit
balances (22,8% share) at 28,6% y/y.
Total private sector mortgage balances, which include both commercial and residential mortgage
loans, recorded growth of 1,9% y/y up to the end of December 2012, compared with 2,5% y/y a
year ago. Commercial mortgage balances contacted by 0,9% in 2012 after growth of 6% in 2011.
The value of outstanding household mortgage balances increased by 3% in 2012 from growth of
1,2% in the previous year. The share of outstanding household mortgage balances in total
household credit balances continued its downward trend, ending 2012 at a level of 61,3%. The
ongoing decline in the share of household mortgage balances is the result of still relatively low
growth in this component of total credit balances, while strong growth in instalment sales and
unsecured credit balances caused the share of these components to rise during last year.
In view of trends in and the outlook for the economy, household finances and consumer
confidence, growth in mortgage balances is forecast to remain in single digits in 2013. Although
consumer price inflation is expected to rise to above 6% this year, interest rates are projected to
remain at current levels before rising around mid-2014. Low interest rates will continue to
support the property market and the affordability of mortgage finance.