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Johannesburg - Annual growth in total mortgage advances (the net outstanding balance of residential and commercial mortgage loans) has slowed to a snail's pace.
New data from the Reserve Bank indicate that growth in the value of total mortgage loans in June slowed to an annualised 8.2%, from an annualised 9.4% in May.
"This was the slowest annual growth since the 8.4% in July 2000," said Jacques du Toit, senior property analyst at Absa's home loan division.
Month on month growth was an insipid 0.1%.
He attributes this to a weaker demand for mortgage finance.
Growth in mortgage advances relating to residential property levelled off in May to 6% on an annual basis, from 6.8% in May and 24.8% in June last year. This is the net growth in the total outstanding mortgage debt - in other words bonds taken up, those settled, and those into which extra capital was paid.
This brought the total outstanding household mortgage indebtedness to R708.4bn. In June household mortgage advances represented 72% of total outstanding mortgage debt.
Growth in mortgage advances has been levelling off since late 2006, and according to Du Toit the current total growth of 8.2% is far removed from the high of almost 31% in October 2006.
Du Toit said the figures might have been expected and they reflect the condition of the housing market, where demand for accommodation has significantly fallen off owing to the economic environment. He said this is especially in the light of the most recent employment figures, where there was a drop of 267 000 in the second quarter compared with the first.
He said the poor employment figures seriously harm households' confidence levels and they don't see their way to spending much at this point.
Householders remain under financial pressure owing to high indebtedness, despite the interest-rate cuts amounting to 4.5% points since December 2008.
Although he does not expect the figure to turn negative on an annual basis, it will still trend towards lower levels in the second half of this year.
-Sake24