MORTGAGE agreements soared by an impressive 18.89% in the three months to June, translating to R7.24 billion, according to the recently published Consumer Credit Market Report (CCMR) and Credit Bureau Monitor (CBM) yesterday.
This surge marked a vibrant quarter for the mortgage sector, even as year-on-year comparisons revealed a decline of 4.36% following three successive dips in mortgage credit extensions.
According to the report, the upward trajectory in mortgage agreements can largely be attributed to the banking sector, which commands nearly 80% of total credit granted. Overall, the total value of new credit extended grew by 5.43% quarter-on-quarter, moving from R132.53bn to R139.73bn.
In parallel, the number of credit arrangements made saw a 4.62% increase, climbing from 4.72 million to 4.94m.
Lynette de Beer, acting CEO of the National Credit Regulator (NCR), acknowledged the struggles consumers face amidst a strenuous economic climate characterized by rising living costs. Nevertheless, she suggested that the recent interest rate drop might provide much-needed relief.
“Consumers are advised to use the cost savings that the interest rate drop provides to increase their monthly debt instalment amount if they can; this will allow them to pay off their debts slightly faster,” De Beer states.
For those unable to increase their payments, De Beer highlighted the importance of at least maintaining current instalment amounts, encouraging a proactive approach to managing debt.
The NCR’s report, which utilises data submitted by registered credit providers and credit bureaus, covers various insights from the credit market through June 2024. Among the notable trends, the value of new mortgages increased significantly by R7.24bn, equivalently an 18.89% rise quarter-on-quarter.
However, this figure still fell short by R2.21bn, or 4.63%, when juxtaposed with the previous year.
In terms of other credit types, secured credit—primarily vehicle finance—rose modestly by R388.55m (0.88%) on a quarter-on-quarter basis but experienced a slight decrease of R405.07m (0.90%) over the past year.
Similarly, credit facilities saw a 4.18% increase of R942.70m since the last quarter and R899.16m year-on-year. Conversely, unsecured credit took a dip, decreasing by R72.41m during this quarter and R395.99m year-on-year, indicating shifts in consumer borrowing behaviour.
As of June 2024, the total outstanding consumer credit balances stood at a staggering R2.37 trillion, reflecting a slight quarter-on-quarter increase of 0.08% and a notable year-on-year rise of 2.63%. Within this, the mortgage debtors’ book alone rose by R8.47 billion quarter-on-quarter and R34.48bn year-on-year.
On the credit-active consumer front, the credit bureaus reported records for 28.15 million individuals, climbing by 0.81% from the previous quarter. Of this total, 17.89m consumers are classified as being in good standing, accounting for 63.57% of the credit-active demographic.
However, the number of impaired accounts also showed a troubling trend, increasing from 20.46m to 20.77m in the same period.
In light of these trends, De Beer urged consumers struggling to manage their debt to engage with their credit providers to negotiate more manageable repayment plans or seek relief options.
She accentuated the importance of understanding the debt counselling process as a viable alternative, recommending that consumers utilise only those counsellors registered with the NCR.
BUSINESS REPORT