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

Private Sector Credit Extension (PSCE)

May 2025

In May 2025, credit demand grew by 5.0%, slightly exceeding April’s 4.6% and surpassing market expectations of 3.0%. Since interest rate cuts began in September 2024, overall credit growth has gathered momentum, with most subcategories recording increases during May.

Mortgage advances and credit for fixed asset purchases remain subdued. Despite a total interest rate reduction of 175 basis points since September 2024 – and an additional 25-basis point cut on 29 May 2025 – property demand has been sluggish. Elevated consumer debt levels, stagnant wages, and rising living costs have limited strong recovery. Nonetheless, the full benefits of lower rates are expected to materialise later in 2025 as household disposable incomes improve, supported by positive market sentiment.

In May, instalment credit sales rose nearly 1% month-on-month, following a 0.3% increase in April, with an annual growth rate of 6.2%. Over the past two years, consumers have increasingly relied on short-term credit to manage rising living expenses, reflected in a 7.0% increase in other loans and advances – up from 6.6% in April.

Growth in property and fixed asset purchases remains modest; mortgage advances grew just 3.5% in May, consistent with April. This subdued activity originates from late-2023, when rising interest rates constrained property demand. However, with recent rate cuts, especially the 25-basis point reduction in May, and further easing anticipated, demand for property and fixed assets is expected to increase as household incomes stabilise and grow.

With inflation remaining favourable, ongoing rate reductions should further boost disposable incomes, fostering increased demand for goods and fixed assets into the second quarter of 2025 onwards.

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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.