31 Oct.
Mortgage advances: Slow pace of growth in household credit and mortgage advances continued in September.
The total value of outstanding credit balances in the South African household sector was up by 5% year-on-year (y/y) to a level of R1 144,5 billion in September 2011, after rising by 5,2% y/y in August. On a monthly basis household credit was R6,8 billion, or 0,6%, higher in September compared with August.
Growth in the value of outstanding private sector mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, showed growth of 2,2% y/y in September, marginally higher than the 1,9% y/y growth recorded in August. The value of total mortgage balances, largely driven by the corporate sector, was up by R4,9 billion, or 0,5%, in September from August.
The value of outstanding mortgage balances in the household sector increased by 1,2% y/y to an amount of R768,6 billion in September 2011, which came to 67,2% of total household credit. On a month-on-month basis, household mortgage balances were up by R1,3 billion, or 0,2%, in September from August.
The continued slow pace of growth in household credit extension, including mortgage finance, is believed to be the result of factors related to the state of household finances. Consumer price inflation remains on a rising trend, adversely affecting consumers’ spending power. The ratio of household debt to disposable income has improved to just below 76% in the second quarter of the year, but remains high compared with historical trends. A large number of consumers had impaired credit records, which impact their access to credit against the background of the National Credit Act and banks’ lending criteria. Consumer confidence has been on a downward trend in the first three quarters of the year, which could have contributed to the slowdown in the growth of household credit balances.
In view of the abovementioned trends and developments, year-on-year growth in mortgage advances is forecast to remain subdued in the rest of the year and for most of 2012, …
Read more at Absa Property Research
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