ABSA_Credit and Mortgage Advances

1. Credit and mortgage advances 30 January 2018
Compiled by
Jacques du Toit
Property Analyst
Absa Home Loans
15 Troye Street
Johannesburg | 2001
PO Box 7735
Johannesburg | 2000
South Africa
Tel +27 (0)11 350 7246
jacques@absa.co.za
www.absa.co.za
Note: The value of and growth in
outstanding credit balances,
especially unsecured credit, were
affected by the inclusion of data
related to African Bank as from
April 2016. As a result, year-on-
year growth in household credit
balances and some of its
unsecured components were
distorted for a 12-month period
from April 2016 to March 2017.
The information in this publication
is derived from sources which are
regarded as accurate and reliable,
is of a general nature only, does
not constitute advice and may not
be applicable to all circumstances.
Detailed advice should be obtained
in individual cases. No
responsibility for any error,
omission or loss sustained by any
person acting or refraining from
acting as a result of this publication
is accepted by Absa Bank Limited
Uptick in household credit balances growth in 2017 from 2016
The value of outstanding credit balances in the South African household sector increased by
3,8% to R1 542,8 billion in 2017, up from a low of 0,7% in 2016. The much subdued 2016
growth rate was to some extent impacted by African Bank statistics in respect of especially
unsecured credit (see explanatory note in this regard). Growth in both secured and
unsecured credit balances improved in 2017 from 2016.
Growth in the value of household secured credit balances (R1 185,9 billion and 76,9% of
total household credit balances) increased to 4,1% in 2017 compared with growth of 2,3%
in 2016. The uptick in growth in secured balances in 2017 came on the back of somewhat
higher growth in household mortgage balances (see below), whereas instalment sales
balances (22% of household secured balances and largely related to vehicle finance),
showed growth of 6,5% last year compared with a contraction of 0,7 in 2016.
Household unsecured credit balances (R356,9 billion and 23,1% of total household credit
balances) increased by 3,1% last year after a contraction of 4,2% in 2016, which was related
to African Bank data that impacted the general loans and advances component (mainly
personal loans and micro finance) of unsecured credit balances. Growth in outstanding
credit card balances, after contracting by 1,2% in 2016, increased by 3,8% in 2017, which
also contributed to the growth in overall household unsecured credit balances last year.
The value of outstanding household mortgage balances increased by 3,5% to R923,2 billion
in the 12-month period up to end-December last year, compared with growth of 3,2% in
2016. The still relatively low mortgage balances growth in 2017 was related to trends in
household finances, low consumer confidence and a subdued performance by the
residential property market last year. Nominal house price growth of around 4% was
recorded in 2017, with various indicators of market activity that pointed to ongoing
relatively tough conditions. The value of outstanding mortgage balances is the net result of
all property transactions related to mortgage loans, including additional capital amounts
paid into mortgage accounts and extra monthly payments above normal mortgage
repayments.
The South African economy is forecast to grow by 1,4% in 2018, with headline consumer
price inflation projected at about 5% and interest rates currently expected to show little, if
any, change this year. In view of these expectations, growth in household credit balances,
including mortgage balances, is forecast at around the 3,5% level in 2018.

2. Home Loans | 2
Period
R billion y/y % R billion y/y % % of private R billion y/y % R billion y/y % % of total % of total
change change sector credit change change mortgage household
balances balances credit balances
Jan 2017 3 275.7 5.5 1 494.3 0.6 45.6 1 293.9 5.0 894.1 3.0 69.1 59.8
Feb 2017 3 310.5 5.3 1 501.7 0.4 45.4 1 300.4 4.5 900.6 2.8 69.3 60.0
Mar 2017 3 331.0 5.0 1 505.4 0.7 45.2 1 305.0 4.6 901.9 3.0 69.1 59.9
Apr 2017 3 324.2 5.9 1 505.2 2.9 45.3 1 305.5 4.3 902.3 3.1 69.1 59.9
May 2017 3 351.6 6.7 1 509.9 2.9 45.1 1 312.6 4.6 905.5 3.1 69.0 60.0
Jun 2017 3 348.3 6.2 1 511.8 2.9 45.2 1 316.2 4.5 907.4 3.1 68.9 60.0
Jul 2017 3 353.4 5.7 1 514.8 3.3 45.2 1 322.4 4.7 910.3 3.0 68.8 60.1
Aug 2017 3 366.2 6.0 1 520.2 3.4 45.2 1 328.0 4.7 913.1 3.1 68.8 60.1
Sep 2017 3 399.8 5.5 1 522.6 3.3 44.8 1 334.3 4.4 914.2 3.0 68.5 60.0
Oct 2017 3 394.5 5.4 1 529.9 3.5 45.1 1 340.2 4.3 918.9 3.3 68.6 60.1
Nov 2017 3 432.5 6.5 1 538.4 3.8 44.8 1 346.6 4.4 922.4 3.6 68.5 60.0
Dec 2017 3 471.0 6.7 1 542.8 3.8 44.4 1 348.1 4.2 923.2 3.5 68.5 59.8
1
End of period
2
Comprising corporate and household credit
3
Comprising commercial and residential mortgages
Source: SARB
credit balances2
Credit and mortgage balances
1
Total mortgage
balances3
Household
mortgage balances
Private sector Household
credit balances
Period
R billion y/y % R billion y/y % % of private R billion y/y % R billion y/y % % of total % of total
change change sector credit change change mortgage household
balances balances credit balances
2008 1 981.9 13.6 1 003.4 15.6 50.6 966.9 13.2 698.3 18.6 72.2 69.6
2009 1 979.5 -0.1 1 033.4 3.0 52.2 1 001.9 3.6 725.1 3.8 72.4 70.2
2010 2 087.9 5.5 1 105.5 7.0 52.9 1 042.4 4.0 758.7 4.6 72.8 68.6
2011 2 216.7 6.2 1 174.8 6.3 53.0 1 068.6 2.5 768.0 1.2 71.9 65.4
2012 2 439.5 10.1 1 291.1 9.9 52.9 1 089.0 1.9 791.0 3.0 72.6 61.3
2013 2 589.0 6.1 1 362.2 5.5 52.6 1 109.7 1.9 809.9 2.4 73.0 59.5
2014 2 808.7 8.5 1 411.9 3.6 50.3 1 157.7 4.3 828.3 2.3 71.5 58.7
2015 3 094.4 10.2 1 475.1 4.5 47.7 1 229.0 6.2 864.4 4.4 70.3 58.6
2016 3 252.3 5.1 1 485.8 0.7 45.7 1 293.1 5.2 891.6 3.2 69.0 60.0
2017 3 471.0 6.7 1 542.8 3.8 44.4 1 348.1 4.2 923.2 3.5 68.5 59.8
1
End of period
2
Comprising corporate and household credit
3
Comprising commercial and residential mortgages
Source: SARB
Credit and mortgage balances
1
Private sector Household Total mortgage Household
credit balances2
credit balances balances3
mortgage balances
8
9
10
11
12
13
14
15
16
0
5
10
15
20
08 09 10 11 12 13 14 15 16 17
%%
Source: SARB
Household credit balances and interest rates
Credit balances growth (left) Prime rate (right)

3. Home Loans | 3
-5
0
5
10
15
20
25
30
08 09 10 11 12 13 14 15 16 17
%
Source: SARB
Growth in household credit balances
Secured credit balances Unsecured credit balances Total credit balances
84.5 84.6 83.1 80.5 77.2 76.5 76.0 75.5 76.7 76.9
15.5 15.4 16.9 19.5 22.8 23.5 24.0 24.5 23.3 23.1
0
10
20
30
40
50
60
70
80
90
100
08 09 10 11 12 13 14 15 16 17
%
Source: SARB
Household credit components
% of total household credit balances
Secured credit balances Unsecured credit balances
8
9
10
11
12
13
14
15
16
-5
0
5
10
15
20
25
30
35
09 10 11 12 13 14 15 16 17
%%
Source: SARB
Household credit balances growth and interest rates
Total credit (left) Secured credit (left)
Unsecured credit (left) Prime rate (right)

4. Home Loans | 4
-2
0
2
4
6
8
10
12
14
16
18
20
22
09 10 11 12 13 14 15 16 17
%
Source: SARB
Growth in household secured credit balances
Mortgages Instalment sales
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
09 10 11 12 13 14 15 16 17
%
Source: SARB
Growth in mortgage balances
Total mortgages Household mortgages Corporate mortgages
-15
-10
-5
0
5
10
15
20
25
30
35
40
09 10 11 12 13 14 15 16 17
%
Source: SARB
Growth in household unsecured credit balances
General loans and advances Credit card debt Overdraft credit