Guest Contributor | Jul 29, 2020 | 0
Locals go on borrowing spree
Private sector credit extension surged to 11.7% in March from 10.2% the previous month buoyed by borrowing by both businesses and individuals.
Business credit extension growth increased from 10% to 11.5% and credit extension to individuals also rose from 10.3% to 11.8%. Credit to companies now stands at 16.7 billion compared to N$15 billion in March last year. The main contributors to this growth came from increased mortgage lending (9.5% to 9.9%) and increased uptake of overdrafts, from a contraction of 0.6% in February to growth of 13.3%.
Mortgage lending makes up the largest component of total loans advances. After reaching an annual high in December 2011 of 15.6% growth, mortgage lending growth slowed slightly in January to 14.7%, and again in February to 14.0%. However, in March mortgage credit growth increased once again, to 14.7%.
Rowland Brown,Group Economist at Capricorn Investment Holdings says the current rate of growth remains extremely high compared to past years, and is largely driven by the significant reduction in the repo rate seen since January 2009.
Mortgage loans now total N$24.2 billion, of which N$5.2 billion is business mortgages and N$19 billion is mortgage loans to individuals.
Annual growth in instalment sales decreased slightly in March after a significant increase in February. Instalment credit extension growth now stands at 18%. Instalment credit growth over in March was seen in both businesses and individuals; however this rate of growth was not as large in magnitude as the previous month.
At 17.9%, the current average level of installment growth for 2012 is well above the average level seen in 2011 (13.2%). “The increase in growth in installment sales was expected due to the dramatic increase seen in purchase of vehicles over recent months, as well as growth in demand for other durable, interest sensitive goods and services” says Brown.