Mortgage appetite rebounds

Exposure to home loans is expected to surpass R1-trillion as competition in the mortgage lending market hots up

There has been an uptick in mortgage lending in recent months, which appears to be supported by the big banks vying more aggressively for a slice of SA’S R960bn home loans market.

The value of outstanding household mortgage balances increased by 4% in 2018, up from growth of 3.5% in 2017, according to the latest figures from the SA Reserve Bank.

Granted, this is nowhere near the 20%-plus growth rates recorded during the 2004-2007 property boom, before banks got burnt by their overzealous lending to home buyers. But it is the first time there has been an acceleration in mortgage advances since 2016, when growth fell sharply (see graph on page 44).

Economists expect demand for mortgage finance to continue its steady upward trajectory — despite the 25 basis point hike in interest rates in November.

Absa Home Loans property analyst Jacques du Toit forecasts household mortgage lending will grow by about 5% this year.

That will push the total value of mortgage debt in SA to just over R1-trillion.

He says property market sentiment increased over a wide front in the fourth quarter of 2018 on the back of improved economic performance, higher growth in real disposable income and a lower consumer price inflation rate due to a fuel price drop late last year.

Despite uncertainty around load-shedding and the outcome of the general elections in May, Du Toit cites a number of factors that could support a further improvement in housing activity and mortgage lending this year. These include increased policy certainty in various sectors of the economy, an acceleration in economic growth — Absa is forecasting 1.7% this