Fiji’s total household sector debt reached $2.9 billion as of June 30, showing a 10.9 percent rise from the $2.6 billion recorded during the same period last year. This debt represents 29.6 percent of the total loans within the country’s banking sector.
According to the Reserve Bank of Fiji (RBF) in its October Financial Stability Review, the composition of household debt is predominantly housing-related, making up 79 percent, followed by personal loans at 14 percent and transportation loans at 7 percent. Most of the lending, about 87.6 percent, is conducted by commercial banks, with licensed credit institutions such as the Housing Authority and Fiji Development Bank handling the remainder.
The report highlighted that the increase in demand for loans in the first half of the year was largely driven by enhanced consumer confidence and a boost in non-housing-related expenditure. It also noted that households reported a negative credit gap of 10.3 percent as of June 30, which indicates that the upsurge in household credit is not currently viewed as problematic.
The RBF pointed out that the ongoing low-interest-rate environment is helping to alleviate debt servicing costs and encouraging households to secure larger loans, especially mortgages. Additionally, the household sector’s ratio of non-performing loans (NPL) improved during this period, dropping to 3.8 percent from 5.1 percent a year earlier, with housing loans being the most significant contributor to these figures, followed by personal and transport loans.
The report also indicated that the ability of households to access finance is expected to enhance in the coming months due to the recent increase in the national minimum wage and civil service salaries announced in the FY2024-2025 national budget. However, it emphasized the importance of licensed credit providers conducting thorough due diligence on borrowers to avoid issues with debt serviceability and potential defaults in the medium term.
Finally, the RBF confirmed that credit standards for housing loan applications have continued to ease over the past year, with expectations that this trend will persist through the end of the year.