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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
October 3, 2025

Private Sector Credit Extension (PSCE)

August 2025

In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.

However, mortgage advances and credit for acquiring fixed assets continue to be restrained despite the ongoing reductions in interest rates. The South African property market remains sluggish, indicating low capital expenditure from both households and businesses. This sector’s recovery is being hindered by high consumer debt levels, stagnant wages, and the rising cost of living. Nevertheless, the full advantages of lower interest rates are projected to emerge later in 2025, as household disposable incomes are boosted by positive market sentiment and the potential for additional rate cuts by the South African Reserve Bank (SARB).

In August, instalment credit sales rose once more by 0.7% on a month-on-month basis, achieving an annual growth rate of 7.8%. Over the past two years, consumers have increasingly turned to short-term credit to cope with rising living costs, as evidenced by an 8.5% increase in other loans and advances, slightly down from the 8.9% noted in July.

With inflation remaining favourable, further rate reductions are expected to enhance disposable incomes, thereby supporting increased demand for goods and fixed assets in the third and fourth quarters of 2025 and beyond.

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