Fiji’s household sector debt reached $2.9 billion as of June 30 this year, reflecting a 10.9 percent rise from the previous year’s figure of $2.6 billion. This debt represents 29.6 percent of the total loans within the country’s banking industry.
According to the Reserve Bank of Fiji (RBF) in its October Financial Stability Review, the breakdown of household debt shows that 79 percent is attributed to housing loans, 14 percent to personal loans, and 7 percent to transportation loans. The majority of this lending, about 87.6 percent, was facilitated by commercial banks, while the remainder was provided by licensed credit institutions, including the Housing Authority and Fiji Development Bank.
The RBF’s June 2024 Credit Conditions Survey indicated that the increased demand for loans during the first half of the year was largely driven by renewed consumer confidence and higher non-housing related spending. The report also noted a negative credit gap of 10.3 percent for households as of June 30, suggesting that the growth in household credit is not currently a concern.
The RBF emphasized that the ongoing low-interest rate environment helps reduce debt servicing costs, encouraging households to take on larger loans, particularly mortgages. The household sector’s non-performing loans (NPL) ratio improved, falling to 3.8 percent compared to 5.1 percent in the same period last year, with housing loans remaining the largest contributor to this category, followed by personal and transportation loans.
Looking ahead, the RBF expressed optimism that the household sector’s access to finance will improve due to the recently announced increases in the national minimum wage and civil service salaries included in the fiscal year 2024-2025 national budget. However, it cautioned that licensed credit providers must conduct thorough due diligence on borrowers to avoid issues with debt serviceability and potential delinquency in the medium term.
The report also noted that credit standards for housing loan applications have continued to ease throughout the year and are expected to remain relaxed by year-end.