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South Africans prefer short-term loans, home loan demand declines, credit card usage Rises

Nedbank's recent findings reveal a shift in lending trends in South Africa, with people opting for more short-term loans over long-term commitments.

From January to November 2023, home loans saw a decline from 7.3% to 4% in November, while credit card usage increased from 8.9% to 9.1% during the same period.

The slowdown in credit demand is expected to persist into the first half of 2024, as households continue to feel the impact of interest rate hikes. High debt service costs will likely lead to increased caution in borrowing and spending.

Nedbank notes that banks will be cautious about offering loans due to the rising number of debt defaults. Corporate demand, particularly from renewable energy projects, will continue, but profits and operational costs may limit large capital expenditures for many companies.

The outlook suggests a gradual improvement in credit growth during the second half of the next year as interest rates ease and the economy experiences a slight recovery. 

Read more here: https://businesstech.co.za/news/banking/739859/south-african-banks-are-closing-the-taps/