Property boom lifts mortage advances to record
03 March 2005
MORTGAGE advances in SA increased 24,8% year on year in January, the highest recorded growth recorded since May 1989 when it was 24,9%.
A cut in interest rates could boost job creation. But it could also cause rampant growth in private-sector credit.
Adrian Saville, chief investment officer at Cannon Asset Managers, said one of the main factors that would influence further growth in mortgage advances was interest rates. “A lot of attention is being turned to the likely outcome of April’s monetary policy committee meeting.
“If you look at recent inflation data (as measured by the consumer price inflation index) which recorded inflation of 3,6% for January, it suggests the MPC should cut interest rates,” said Saville.
“The relatively stable interest rates during 2004, combined with
a sharp increase in house prices have caused monthly repayments on new
mortgage loans to assume a rising trend since early last year. This
development is having a negative effect on the affordability of housing,”
said Du Toit.
by : Nick Wilson - (www.businessday.co.za)