The first month of 2017 saw the value of outstanding credit balances in the South African household sector rising by a much subdued 0,6% year-on-year (y/y) to R1 494,2 billion, after growth of 0,7% y/y at end-2016. This continued low growth in credit balances, which came to its lowest level since the start of 2002, occurred against the background of slowing growth in secured credit balances, whereas unsecured credit balances contracted further in January.
The outlook is for growth in household credit balances, including mortgage balances, to remain largely subdued in 2017. This will be the result of expected continued relatively low economic and employment growth, increased pressure on levels of disposable income in view of tax changes announced in the 2017 Budget, headline consumer price inflation projected to average around 5,5% this year, interest rates forecast to remain at current levels throughout the year and a resultant low level of consumer confidence. These developments will be reflected in banks’ risk appetites and lending criteria against the background of trends in households’ credit risk profiles.
Read more here: Credit and Mortgage Advances (Jan 2017)