Banks lent even less money to people wanting to buy a home in February and statistics show that mortgage advances declined from 3,8% in January to just 3,4% in February according to data released by the South African Reserve Bank.

Outstanding mortgage balances in the household sector increased by 4,1% year-on-year in February after rising 4,6% in January. On a monthly basis, household mortgage balances were up by R2,8-billion in February compared with the previous month.

According to Jacques du Toit, senior property analyst at Absa Home Loans, the declining trend in mortgage advances is believed to be related to various factors including the ratio of household debt to disposable income that was at 77,6% at the end of last year.

“The percentage of credit-active consumers with impaired credit ratings remained high at 46,5%, in the final quarter of 2010 and this situation impacts on the consumers’ ability to take up credit against the background of the National Credit Act. Moreover, the banks’ lending criteria remained strict,” says Du Toit.

He says that significant increases in the fuel price and rising food inflation are also having an impact on consumers emphasised by the fact that consumer confidence had fallen in the first quarter of this year.

Total mortgage advance reach R1 047,6-billion in February this year, while mortgage advances to households at the end of February were at R764,2-billion equivalent to 73% of the total.

Du Toit says that mortgage advances growth is forecast to remain in single digits for the rest of this year.

“The cost of servicing household mortgage debt as a percentage of disposable income was around 4,3% in the last quarter of 2010. This was the net result of trends in growth of household mortgage debt – that increased by 0,9% during the period – and a lower mortgage interest rate,” says Du Toit.

Please contact us if you require any further information or would like to apply for finance:

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011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

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Purchase your first home?

Before you set your sights on buying the home of your dreams, it is important to establish whether you are ready to make such a big, ongoing financial commitment – in other words, is your income stable and sufficient to support a first-time bond?

If you are secure in your job and earn a regular monthly salary, you’ll have a fairly good idea of whether or not you can afford to buy a home. However, if you are self-employed, your income may be unpredictable, making it more difficult to know for certain whether you are in a position to purchase. Mortgage Plus experienced bond consultants will help you to verify your financial standing, and calculate how big a home loan you can afford and qualify for.

Also important to bear in mind are the costs and fees associated with purchasing your new home.  You’ll need to have money saved to place a deposit on the home (this requires a minimum of 10% of the home’s value), and you’ll also have to consider moving costs, home-owners’ insurance and rates on your property. To ensure that you can afford the purchase, it’s essential to calculate all your monthly expenses AND those involved in buying your first home. As a general rule, your bond repayments, together with taxes and property insurance, shouldn’t exceed 25% to 30% percent of your gross income. In fact, at Mortgage Plus, as a responsible bond originator, we will not approve a loan that exceeds 30 per cent of your joint gross monthly income. It’s also a good idea to try to pay off other debt you may have (such as personal loans or credit card debt) before applying for a home buyer mortgage.

CONTACT US

Speak to a home loan consultant about financing your new property or reviewing your existing mortgage. We are able to assist in lowering your bond repayments and securing attorney discounts.

Complete this short form online
Call us on 011.327.4489
Email: morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za