Mortgage Barometer - Residential Mortgage Market Stress

The latest report from First National Bank (FNB) has revealed that the deterioration in residential mortgage market stress during the recent interest rate hiking cycle has not been severe to date - it is also plausible that we could see improvement in 2017 if interest rates continue to move sideways.

John Loos, household and property strategist at FNB, says that if interest rates don’t rise further in 2017 we will see a year of improving Residential Mortgage Market Stress, and some mild decline in mortgage arrears levels. 

This can be attributed to the likelihood that Household Sector Credit will continue to grow noticeably slower than Nominal Disposable Income, thereby lowering the all-important Household Debt-to-Disposable Income Ratio. This in turn lowers the vulnerability of households to interest rate hikes. 

The report has revealed that the current ongoing declining trend in the Household Debt-to-Disposable income Ratio and a period of sideways movement in interest rates has had a similar impact as a mild interest rate cutting cycle, because the declining Debt-to-Disposable Income Ratio lowers the Debt-Service Ratio.

They are forecasting “more of the same” for the foreseeable future. However, consumers should keep in mind that such forecasts don’t come without risks, especially in the current uncertain times of possible ratings downgrades and resultant dips in investor confidence. Should such dips play out, causing sharp Rand weakening, there is no guarantee that further interest rate hiking can’t take place.

Read the full report: Residential Mortgage Market Stress

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Jan 2018
      While the current property market may still favour buyers, it doesn’t mean that they shouldn’t be well prepared before putting in an offer to purchase.
    • 17 Jan 2018
      Lightstone lists Blair Atholl as the most expensive suburb with an average house price of R11.2 million, followed by Westcliff (R10.5 million), Dunkeld (R9.3 million), Sandhurst (R9.1 million) and Inanda (R7.2 million).
    • 17 Jan 2018
      As it currently stands, there are four main ways in which a home can be bought in South Africa, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, who adds that deciding in which legal entity to purchase the property is not a decision that should be entered into lightly, as each has its pros and cons.
    • 16 Jan 2018
      The start of the new year is symbolic of new beginnings. A good time to take stock of one’s possessions as well as how necessary they actually are. However, seeing as the process may appear daunting – a plan goes a long way.
    • 16 Jan 2018
      The Western Cape is still in the throes of a severe drought and many households have to adjust the way they use and save water. It is a little more complicated in sectional title schemes, however, as it is not that easy to implement grey water systems for multiple users and it is also difficult to monitor water usage accurately if there are no separate water meters
    • 15 Jan 2018
      In ideal rental situations, when a lease is signed the tenant will stay for the full duration of his lease without any complications and the landlord will uphold his obligations, creating a win-win situation for tenant and landlord.
    • 15 Jan 2018
      The Atlantic Seaboard’s housing market has stoically withstood the brunt of the growing economic and political instability, consistently achieving double digit growth way above the national average, however, in 2017 South Africa’s most resilient market finally began to yield to the pressure.
    • 15 Jan 2018
      Sectional title insurance can be a little confusing and, as a new owner, you may be tempted to just assume your body corporate has you covered. While this may be the case, understanding the extent of your coverage and your personal liability is the only guaranteed way to protect yourself against potentially costly oversights.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us