Johannesburg – Year-on-year mortgage advances growth tapered off in
March to 3.6% from 3.9% in February, reflecting the condition of household
finances, banking group Absa said on Friday.
Mortgage advances is expected to continue recording single digit growth for the remainder
of 2010, Jacques du Toit, senior property analyst at Absa Home
Statistics released by the South African Reserve Bank revealed that month-on-month growth
was also lower at 0.4% in March (0.7% in February).
Outstanding mortgage balances with regard to the household sector were up by 4.1% y/y in
March, slightly lower than the growth rate of 4.3% y/y recorded
Month-on-month growth of 0.4% was recorded in household sector mortgage
balances in March, down from 0.9% in February.
Total credit extended to the household sector, which consists of installment
sales agreements, leasing finance, mortgage advances, overdrafts, credit card
debt and other loans and advances, increased marginally to 3.6% (y/y) in March
from 3.5% in February. On a monthly basis, household credit extension was
up by 0.3% in March (1.1% in February), Absa said.
Household mortgage advances, largely related to residential property continued to
record relatively low year-on-year growth over the past few months, the
This was evident of households' financial position, which is influenced by factors such as
tight labour market conditions, pressure on household disposable
income, and a high debt-to-income ratio. In addition to this, applicants for
mortgage loans have to qualify for finance, based on banks' lending
criteria and National Credit Act stipulations, Absa pointed out.
"Against this background, mortgage advances growth appears to be on a very
slow recovery, but which will be supported by the economic
interest rates and a revival in property market conditions," Du Toit said.
"In view of these developments and expectations, mortgage advances is
still forecast to
record single digit growth this year," he concluded.