Mortgage advances slip further

2008-12-01 00:00

Mortgage advances for October continue to decline in year-on-year growth, from 16,6% in September to 16,1%, according to data released by the Reserve Bank.

The decline is the continuation of a trend that started in 2006, and is the result of capital repayments steadily narrowing the gap with the plummeting value of new mortgage loans granted.

John Loos, property strategist at FNB home loans division, says this indicates that residential mortgage advances are largely responsible for the declining growth in the mortgage market.

Residential mortgage advances (78,3% of total banking sector mortgage advances) continued their growth decline in September from 15,3% in August to 14,5%.

The smaller commercial mortgage advances component showed slower but strong growth of 26,3% in September year on year, a reflection that the segment is also feeling the pinch.

Loos believes that residential property will begin to pick up in 2009.

— www.rodneyhayter.com

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