Buyers Struggling To Secure Home Loans

This article is courtesy of Realestateweb (Home Loans: Banks stingier than ever – 30 June 2009)

The recent statistics release by the South African Reserve Bank confirms that buyers are struggling to secure mortgage finance. This resulted in mortgages advances reaching the lowest level of growth in 9 years.

According to Jacques du Toit, senior property analyst at Absa Home Loans, the data released showed that the year-on-year growth in mortgage advances slowed down to 9,4% in May this year. Also, on a month-on-month basis the outstanding balance on mortgage loans was marginally higher in May, after growth of 0,1% was recorded in April compared to March.

Du Toit added that the amount of outstanding mortgage balances in the household sector was slightly down to R708,3bn in May, from R708,4bn in April.

This shows that the recession is taking its toll on not only households but also mortgage originators relying on home loan commissions and estate agents who need to close property deals.
"Despite interest rates having been cut by a total of 450 basis points since December last year, mortgage advances growth is expected to slow down further in the near term on the back of prevailing economic conditions, which are a contributing factor in the relatively low demand for housing and mortgage finance," said du Toit.