Mortgage advances growth remains subdued in early 2013

Year-on-year (y/y) growth in the value of outstanding credit balances in the South African household sector remained unchanged at 9,9% in January 2013 from December last year. This growth in household credit balances was the result of continued strong growth in the components of instalment sales and unsecured credit, with growth in mortgage balances marginally lower in January from December. Growth in instalment sales balances (15,4% share in total household credit balances) was 19,5% y/y in January, with growth in unsecured credit balances (23,1% share) at 28,4% y/y.


Total private sector mortgage balances, which include both commercial and residential mortgage loans, saw growth slowing down somewhat further to 1,8% y/y in January. Commercial mortgage balances continued to contract, by 0,8% y/y in the first month of the year. Growth in the value of outstanding household mortgage balances was marginally lower at 2,9% y/y in January. Based on the continued strong growth in instalment sales and unsecured credit balances, the share of these components in total household credit increased to levels not seen in the past ten years.

With growth in outstanding household mortgage balances remaining subdued, its share in household credit dropped further to 60,9% in January 2013, from around 70% in 2009/2010. Growth in mortgage balances is forecast to remain relatively low in 2013 on the back of trends in and the outlook for the economy, household finances, consumer confidence and property market conditions. Inflationary pressures are set to continue for most of 2013, but interest rates are forecast to remain unchanged throughout the year, also taking account of macroeconomic trends and the possible impact of these on the household sector.


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