30 Jul.
Absa: Mortgage advances growth continues to slow down.
Credit extension to the South African household sector amounted to R1 138,1 billion in July 2011, with year-on-year (y/y) growth of 6,6% recorded in July. Month-on-month growth came to 0,2% in July (0,4% in June). Household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt, and general loans and advances.
The value of outstanding private sector mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, was up by 2,9% y/y in July 2011 after rising by 3,3% y/y in June. The value of total mortgage balances was R1,1 billion, or 0,1%, higher in July compared with June this year.
The value of outstanding mortgage balances in the household sector amounted to R767,2 billion in July 2011, rising by only 2,7% y/y. On a monthly basis, outstanding balances with regard to household mortgages were up by around R860 million, or just 0,1%, in July from June.
The continued low growth in mortgage advances is believed to be driven mainly by trends in factors related to household finances. Consumer price inflation has been on a rising trend since October last year, negatively impacting consumers’ purchasing power, while interest rates remained unchanged since last cut in November 2010. Factors impacting the affordability and availability of mortgage finance, and households’ ability to take up credit, include a relatively high level of indebtedness (76,8% debt-to-income ratio) and a large number of credit-active consumers (8,63 million, or 46,4% of a total of 18,6 million) having impaired credit records in the first quarter of 2011.
Against this background, household credit extension, including mortgage advances, are forecast to continue to record single-digit growth on a year-on-year basis in the rest of 2011 and into 2012. …
Read more at Absa Property Research
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