As of June 30 this year, Fiji’s total household sector debt reached $2.9 billion, reflecting a significant 10.9 percent increase from the $2.6 billion recorded during the same period last year. This debt constituted 29.6 percent of the total loans within the country’s banking industry.
In its October Financial Stability Review, the Reserve Bank of Fiji (RBF) reported that the household debt was primarily made up of housing loans, accounting for 79 percent, followed by personal loans at 14 percent, and transportation loans at 7 percent. The majority of this lending, approximately 87.6 percent, was facilitated by commercial banks, with the remaining share provided by licensed credit institutions such as the Housing Authority and Fiji Development Bank.
The RBF referenced the June 2024 Credit Conditions Survey, which indicated that the rising demand for household loans in the first half of the year was largely driven by renewed consumer confidence and increased expenditure on non-housing related items. The report noted that households had a negative credit gap of 10.3 percent as of June 30, suggesting that the growth in household credit is not a current concern.
The central bank highlighted that the ongoing low-interest rate environment is helping to mitigate debt servicing costs, encouraging households to take on larger loans, particularly for mortgages. The report also noted an improvement in the household sector’s non-performing loans (NPL) ratio, which dropped to 3.8 percent from 5.1 percent in the previous year, with housing loans continuing to constitute the majority.
Additionally, the RBF expressed optimism that the ability of households to access finance would enhance in the coming months, following the increase in the national minimum wage and public sector pay rises outlined in the FY2024-2025 national budget. However, it also advised that licensed credit providers should perform thorough due diligence on borrowers to prevent future issues related to debt serviceability and potential defaults.
Moreover, the report indicated that the credit standards for housing loan applications have been gradually easing over the past year, with expectations that this trend will continue through the end of the year.