|Commercial banks’ variable mortgage interest rates were at 10,5% at the end of 2005 after lending rates had been reduced by 50 basis points in April last year.|
Based on an average house price of R733 169 in the middle segment of the market in the fourth quarter of 2005, the monthly repayment on a new mortgage (100% over a 20-year repayment period at a variable mortgage rate averaging 10,5%) amounted to R7 320.
In the same quarter of 2004, the comparable repayment was R6 540, calculated at an average house price of R633 605 and a mortgage rate of 11% in that quarter. The difference of R780 between these monthly repayments can be ascribed to house prices being 15,7% higher in the past quarter than they were a year ago, whereas the mortgage rate was 50 basis points lower than in the fourth quarter of 2004.
Nominal growth in total mortgage advances was still well above 20% at the end of 2005. However, the gradually declining trend in mortgage advances growth since October 2005 is most probably the result of the still slowing residential property market. Talk of higher interest rates late last year could also have had an impact in this regard.