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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
July 29, 2025

Private Sector Credit Extension (PCSE)

June 2025

In June 2025, credit demand increased by 5.0%, aligning with market expectations for the month. Since the interest rate cuts began in September 2024, overall credit growth has accelerated, with most subcategories showing increases during June.

However, mortgage advances and credit for fixed asset purchases remain restrained, despite the ongoing interest rate cuts initiated in September 2024. Demand for property continues to be sluggish in South Africa, indicating low capital expenditure by households and businesses. High consumer debt levels, stagnant wages, and increasing living costs still constrain recovery in this sector. Nevertheless, the full benefits of lower interest rates are anticipated to materialise later in 2025, as household disposable incomes improve, driven by positive market sentiment and potential additional rate cuts by the South African Reserve Bank (SARB).

In June, instalment credit sales grew by 0.8% month-on-month, following a 0.9% increase in May, with an annual growth rate of 6.5%. Over the past two years, consumers have relied more on short-term credit to cope with rising living expenses, shown by a 7.1% increase in other loans and advances, up from 7.0% in May.

With inflation remaining favourable, continued rate reductions are expected to further enhance disposable incomes, promoting increased demand for goods and fixed assets in the second quarter of 2025 and beyond.

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