Web Bytes

Web Bytes 323

FNB January 2011 Mortgage and Household credit
FNB - South Africa
In short, therefore, one could argue that accelerating household sector credit growth is a sign of better economic times. That may be so, with interest rates at lowest levels in decades. However, when seen against the backdrop of rising inflation, and thus interest rate, risk, and given the already high level of household indebtedness and weak savings rate, perhaps the accelerating growth trend in household borrowing should raise some concern, as it looks increasingly likely that we may enter the next interest rate hiking cycle with a still-high debt-to-disposable income ratio. That would surely sustain the pressure on the already-weak housing market.
FNB Mortgage and Household credit

Mortgage advances
Absa - South Africa
Slow growth in mortgage advances continues
In January 2011 growth in household credit extension, comprising instalment sales agreements, leasing finance, mortgage advances, overdrafts, credit card debt and other loans and advances, was 7.5% on a year-on-year (y/y) basis. (6,9% y/y in December 2010). This is according to data released by the South African Reserve Bank on domestic credit extension.

The growth in the total value of outstanding mortgage balances at monetary institutions, comprising both commercial and residential mortgage loans, was lower for the second consecutive month at 3,8% y/y in January this year, down from 4% y/y in December and 4,8% y/y in November last year.

The outstanding balance of mortgage finance extended to the household sector was up by 4,6% y/y in the first month of the year, unchanged from December 2010. On a monthly basis household mortgage balances were up by R2,7 billion, or 0,4%, in January compared with December.
Absa Mortgage Advances

FNB House Price Index
FNB - South Africa
And so, with year-on-year house price growth now close to zero, rising inflation pressures expected to slow real household disposable income growth, and interest rate hiking expected to start late in 2011, our expectation for mild average house price decline of around -1% for the year as a whole remains. Predicting Middle East Crisis outcomes is virtually impossible, but it must be said that its potential impact on oil prices poses "upside" risk to inflation and interest rates, "downside" risk to economic growth expectations, and thus "downside" risk to our projection of only moderate house price decline.
FNB House Price Index

FNB House Price Trends Major Metro Price Segments
FNB - South Africa
In short, therefore, the major segment indices, as calculated from Deeds Office transactions by individuals in areas that we deem to be residential-dominant, reflect the tough financial times of the household sector. This means that, in 2010, the more affordable metro areas performed better than the higher-priced segments, with former Black Townships seemingly the best price growth performers. This also means that holiday-driven regions underperformed the major metros, where the more essential primary residential demand creates a more stable price performance.
FNB Major Metro

In a usufruct arrangement, who pays for the upkeep of a home?
RealEstate Web - South Africa
Rob Lawrence explains....

The legal term usufruct is used to define a state in which an individual has the right to occupy a property even though he or she does not own it. To be legally binding a usufruct must be registered against the title deeds.

Usufruct is most commonly used when a married person (in most cases the husband) leaves a home to his children on condition that his spouse is allowed to live there for the remainder of her life.
RealEstate Web

Leave a comment:

Security Picture (click to change)
Word shown in picture:
menu close

Search Articles