The growth in home loans advances remained sluggish but the total value of outstanding credit balances in the country’s household sector increased by 7,4% year-on-year (y/y) to R1 127,8-billion according to figures released by the South African Reserve Bank yesterday.
The number of new home loans being granted will remain sluggish for the rest of this year as consumers battle to afford or qualify for finance.
Total household credit comprises instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt and general loans and advances.
According to Jacques du Toit, senior property analyst at Absa Home Loans, the growth in the total value of outstanding mortgage balances – both for commercial and residential bonds – dropped by 2,9% y/y.
“It was the lowest year-on-year growth on record since 1966,” says Du Toit. “On a monthly basis, total mortgage balances were down by R1,6-billion or 0,2%,” he adds.
“The mortgage balances in the corporate sector comprise about 26,5% of the total market value of R1 046-billion and showed that in this sector, mortgage finance recorded growth of just 2,9% y/y in March, a record low,” he says.
Du Toit points out that mortgage balances in the household sector – largely related to residential properties – recorded growth of 4,3% y/y, up from 4,1% in February. The value of the bonds was R4,5-billion.
“Despite the fact that interest rates are at their lowest level in 35 years, the housing market is still experiencing relatively tough conditions. These are driven by various factors that impact on the consumers’ ability to afford housing and qualify for a mortgage bond,” says Du Toit.
He says there are still high levels of debt in relation to household income and a large percentage of consumers have impaired credit records. “Rising transport costs, higher food prices also contribute to the inability of consumers to qualify for mortgage finance,” says Du Toit.
He forecast that growth in mortgage advances as a component of household credit will record single-digit growth for the coming year.
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My children have been trying to get a home loan for 2 months now. Even though they are first time buyers Standard Bank still insists that they have a 10% deposit, Standard Bank also totally undervalue the houses. How are people meant to buy houses when the banks treat them like this. - Dallas
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