Nearly two-thirds of South Africans are apparently keeping their cash somewhere other than a bank, and while that might sound like a personal finance quirk, it is quietly reshaping how mortgages and rental income function across the property market. A recent IOL report puts the figure at 64%, and for property buyers, developers and landlords, that number signals a genuine squeeze on financing rather than a curious statistic to file away.
Keeping cash out of the bank means holding physical notes or relying on informal saving methods instead of formal deposits, and the practical effect is straightforward: it shrinks the pool of deposits banks can actually lend against, whether for home loans or construction finance.
Why South Africans are choosing mattresses over savings accounts
Several forces are pushing this trend. Inflation has run above 6% for several quarters, eroding the real value of money parked in low-interest accounts fast enough that keeping cash on hand can feel, perversely, like the more rational choice. The central bank’s repo rate sitting near 8% makes borrowing expensive, which nudges some savers toward holding cash as an inflation hedge rather than earning what feels like an inadequate return in a savings account. Layer on periodic reports of bank fees and lingering concerns about financial-sector stability, and the drift away from formal banking starts to look less like an anomaly and more like a rational, if collectively costly, response to a genuinely difficult savings environment.
Mortgage lenders depend on a steady flow of deposits to fund home loans, and a shrinking deposit base can push banks toward tighter credit criteria, higher mortgage rates, or smaller loan sizes. First-time buyers, especially those with limited savings of their own, are likely to feel this first: a longer wait for financing, or a push toward higher-cost alternative lenders that fill gaps traditional banks step back from.
Developers feel a version of the same pressure from the other side. Construction projects typically lean on bank loans secured against future sales, and a less generous lending environment can mean delayed new builds or a scramble for equity partners, either of which slows the supply of new housing and commercial space reaching the market. Landlords servicing mortgage repayments through rental income face their own version of the squeeze if tenants, holding cash themselves rather than using electronic payment channels, struggle to pay rent reliably on time.
The ripple effects extend beyond property specifically. A smaller deposit pool limits banks’ capacity to extend credit to small businesses generally, which in turn softens demand for commercial property, while cash sitting outside the formal economy also means less of it gets taxed, constraining government’s own capacity to fund the infrastructure property development ultimately relies on. What remains genuinely uncertain is how long this cash-holding pattern lasts, and whether banks will respond with new products or incentives designed to coax deposits back into the formal system, something the IOL report leaves entirely open.
South Africa is far from alone in seeing savers drift away from formal banking during a squeeze like this one, a pattern economists in several emerging markets have documented whenever inflation and interest rates move in ways that make holding cash feel more rational than it normally would. What makes the property-sector angle here particularly worth watching is the timing: South Africa’s housing market has already been navigating tighter credit conditions from elevated interest rates generally, and a shrinking formal deposit base compounds that pressure rather than easing it, potentially extending a slow property market for longer than the interest-rate cycle alone would predict.
The informal cash economy this trend feeds is not new to South Africa, but its scale relative to the formal banking sector is what makes this particular statistic worth taking seriously. A society where a majority prefers cash to deposits is one where a large share of economic activity happens outside the visibility, and the credit-scoring history, that formal lenders rely on to assess risk, which can make it genuinely harder for even creditworthy borrowers to prove their reliability on paper when the time comes to apply for a mortgage or a business loan.
