Credit and mortgage advances in the first half of 2017

The value of outstanding credit balances in the South African household sector showed growth of 2,9% year-on-year (y/y) to a level of R1 510,6 billion in the first half of 2017. This was the combined result of trends in household secured and unsecured credit balances over this period. Outstanding household mortgage balances (R907,4 billion and 78,3% of total household secured credit balances and 68,9% of total private sector mortgage balances) increased by 3,1 y/y up to end-June.

The South African economy is in a technical recession after two consecutive quarters of a contraction in real gross domestic product, with the forecast of growing by a much subdued 0,3% in 2017. Growth in household credit balances, including mortgage balances, is expected to remain relatively low up to year-end. However, lending rates were lowered by 25 basis points in July as a result of an improved inflation outlook and projected continued low economic growth, with another rate cut of 25 basis points expected in September this year. This will give some further welcome financial relief to indebted consumers.

Home loan repayment patterns, which shifted further up to mid-2017 against the background of trends in household finances, are expected to continue to reflect the extent of home owner financial pressure over the short to medium term.

Read more here: Absa Credit and Mortgage Advances (June 2017)