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Growth in household credit, bond balances to remain subdued - Absa

Apr 30 2018 15:52

Cape Town - The value of outstanding credit balances in the South African household sector was R1 564.1bn at the end of March and showed 3.9% year-on-year (y/y) growth up to the end of the first quarter of 2018, according to Jacques du Toit, property analyst at Absa Home Loans.

The value of outstanding mortgage balances is the net result of all property transactions related to mortgage loans. It includes additional capital amounts paid into mortgage accounts, and extra monthly payments above normal mortgage repayments.

"Although lending rates were lowered by 25 basis points in late March, consumer finances will be adversely affected by factors such as higher taxes and some major fuel price hikes," said Du Toit.

"Growth in household credit balances, including mortgage balances, is forecast to remain in single-digit territory for the rest of the year."

He said y/y growth in secured credit balances was marginally lower at the end of March, whereas growth in unsecured credit balances accelerated somewhat up to the end of the first quarter of 2018.

Household secured credit balances - consisting of mortgage and instalment sales balances - increased by 3.7% y/y to R1 195.7bn in the first three months of the year, making up 76.4% of total household credit balances.

Growth in mortgage balances slowed down further on a y/y basis up to end-March, whereas growth in instalment sales balances was unchanged at 6% y/y at the end of March compared to the end of February.

Growth in the value of household unsecured credit balances - R368.4bn and 23.6% of total household credit balances - accelerated further to 4.5% y/y up to the end of March. It was 3% y/y at the end of January and 4.1% y/y at the end of February this year.

General loans and advances balances - mainly consisting of personal loans and micro finance, with a share of 58.6% in unsecured balances - increased by 4.5% y/y to R215.7bn up to the end of March after showing growth of 4.4% y/y at the end of February.

The value of outstanding private sector mortgage balances - R1 364.5bn and 38.7% of total private sector credit balances of R3 529.6bn - which includes both corporate and household mortgage balances, increased by 4.6% y/y up to the end of March.

Growth in corporate mortgage balances (R434.6bn and 31.9% of total private sector mortgage balances) was unchanged at 7.8% y/y at the end of March from the end of February.

Growth in outstanding household mortgage balances - totalling R929.9bn and with a share of 77.8% in total household secured credit balances and 68.2% in total private sector mortgage balances - remained on a gradual downward trend to 3.1% y/y up to the end of March this year, after reaching a level of 3.6% y/y at the end of November last year.

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absa  |  sa economy  |  credit  |  money  |  home loans  |  banking
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