Home loan origination in South Africa: What buyers need to know for 2025

There has been an increase in consumption-led activity across all major credit products, according to data from TransUnion.

The TransUnion Industry Insights Report highlights key trends in South Africa's credit economy and factors shaping future access to consumer credit.

Recently, significant changes in energy supply, such as the signing of the Electricity Regulation Amendment Act, have helped improve the economy. Additionally, South Africans can now access up to 10% (capped at R30,000) of their retirement savings once per tax year, providing potential liquidity.

However, the country still faces challenges, including high unemployment, which remains at 32.1%, despite a small decline.

TransUnion’s Q3 2024 Consumer Pulse Survey found that 13% of consumers reduced retirement savings to free up disposable income, while 25% reported that household incomes aren’t keeping pace with inflation.

Despite the high cost of living, growth in credit product originations was observed, with retail revolving credit rising 21.9% YoY in Q3 2024. As inflation decreases and interest rates are expected to fall, economic growth should strengthen, easing the cost of living and borrowing.

The home loan market saw a slight dip in originations (down 1.3% YoY in Q3 2024), while average loan amounts rose by 1.4%. This decline may be temporary, as lower borrowing costs could boost affordability, TransUnion said.

"As the cost of borrowing improves, the home loan market may also revert back to a healthy trend of greater demand and supply."

The auto loan market experienced its first positive growth since Q4 2022, with a 1.1% YoY increase in originations, as inflation and interest rates ease.

Lenders should focus on identifying resilient consumers and implementing proactive measures to spot early signs of risk. Credit education will be crucial in promoting responsible payment behaviours. As interest rates drop, lenders may also benefit from targeting consumers who are likely to refinance their mortgages, taking advantage of lower rates to boost liquidity.