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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
January 30, 2025

Private Sector Credit Extension (PSCE)

December 2024

In 2024, South Africa saw a 4.0% increase in credit extended by financial institutions, with December demand rising by 3.8%. While credit demand remains low, the 50-basis point interest rate cut should boost property and fixed asset purchases, enhancing disposable income and overall demand as we progress into 2025.

In 2024, credit extended by financial institutions in South Africa increased by 4.0% for the year, with demand for credit growing by 3.8% in December, following a 4.2% rise in November. Despite this growth across most sub-categories, overall credit demand remains low, even after the interest rate reduction in November.

Mortgage advances and credit for fixed asset purchases are sensitive to interest rates, and the 25-basis point cut in November has not yet significantly affected property demand. The overall interest rate reduction of 50 basis points for 2024 may take time to impact the market, with benefits likely to become apparent later in 2025 as disposable income for households and businesses improves.

In December, instalment credit sales rose by just 0.2%, following a 0.7% increase in November, with an annual increase of 6.1% for December 2024. Over the past two years, consumers have increasingly relied on short-term credit to navigate financial pressures and rising living costs, evidenced by a 4.5% increase in loans and advances in December after a 4.6% rise in November.

Growth in property and fixed asset purchases remains modest, with mortgage advances increasing by only 3.2% in December 2024. The slowdown in mortgage growth rates in late 2023 is largely due to the impact of rising interest rates on the property sector. However, the recent 50-basis point interest rate cut and the potential for another 25-basis point reduction in January 2025 may enhance demand for properties and fixed assets in the coming months. As lower interest rates improve disposable income for consumers, overall demand for goods and fixed assets could also rise as we move into 2025.

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Private Sector Credit Extension (PSCE): August 2026

South Africa’s credit market is showing surprising resilience, with credit demand rising by 7.5% in August 2026 despite renewed interest-rate pressure, elevated inflation and mounting household costs. While mortgage advances continued to grow, the fragile recovery in the property market highlights the strain caused by subdued investment, high debt levels and rising municipal and energy expenses. At the same time, sluggish instalment credit growth and continued reliance on short-term borrowing reveal how consumers are navigating increasingly difficult financial conditions. With higher oil prices, geopolitical risks and further SARB tightening adding to the pressure, this report examines what the latest credit trends reveal about household finances, business confidence and the broader South African economy.