Fiji’s total household debt reached $2.9 billion as of June 30 this year, representing a 10.9 percent increase from the $2.6 billion recorded during the same period last year. This debt amounts to 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 includes 79 percent for housing, 14 percent for personal loans, and 7 percent for transportation loans. The report notes that commercial banks facilitated the majority of this lending, accounting for 87.6 percent, while the remainder was provided by licensed credit institutions such as the Housing Authority and Fiji Development Bank.
The RBF referred to the June 2024 Credit Conditions Survey (CCS), highlighting that the increased demand for loans in the first half of the year was primarily a result of renewed consumer confidence and rising non-housing related spending. As of June 30, households reported a negative credit gap of 10.3 percent, indicating that the growth in household credit is currently not a major concern.
The RBF stated that the ongoing low-interest rate environment helps mitigate debt servicing costs, encouraging households to pursue larger loans, particularly mortgages. The report also indicated an improvement in the household sector’s non-performing loans (NPL) ratio, which decreased to 3.8 percent from 5.1 percent in the same period last year, with housing loans continuing to represent the majority of these non-performing assets.
Moreover, the RBF expressed optimism that access to finance for households will enhance in the coming months due to the new national minimum wage and civil service pay increases outlined in the FY2024-2025 national budget. However, it emphasized that licensed credit providers must ensure thorough evaluations of borrowers to avoid issues with debt serviceability and potential delinquency in the medium term.
The report concluded by noting that credit standards for housing loan applications have continued to ease throughout the year up to June 2024, with expectations for this trend to persist until the year’s end.