Household credit and mortgage balances

The value of and growth in outstanding credit balances, especially unsecured credit, in the South African household sector was in April 2016 impacted by the inclusion of data for the new African Bank as from that month. As a result, year-on-year growth in household credit balances and some of its unsecured components may be distorted for a 12-month period as from April this year.

Growth in outstanding household credit balances was recorded at 2,3% year-on-year (y/y) at the end of April, with the value of these credit balances amounting to R1 462,9 billion. Growth in household mortgage balances slowed down to 4,3% y/y to R875,5 billion (69,9% of total mortgage balances and 27,9% of total private sector credit balances) at end-April.

A stagnating economy, expectations of rising inflation and upward pressure on interest rates have the potential to negatively impact household finances (income, consumption, credit-risk profiles, financial vulnerability, etc) and drive consumer confidence lower. These factors, together with credit providers’ risk appetites and lending criteria, will cause growth in household credit extension to remain low, with an increasing risk of credit growth declining further from current levels.

Read more here: Absa Credit and mortgage advances (Apr 2016)