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The 2 noticeable Mortgage Market Share gainers

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Mortgage Credit to Households continued to accelerate mildly, contributing to further acceleration in total Household Sector Credit growth

Growth in Household Sector Mortgage Credit Outstanding continued to accelerate moderately in October, in lagged response to some mild strengthening in the housing market around 2013 and 2014.

This has contributing to further slight increase in overall Household Sector Credit growth.

Although the cumulative growth acceleration of recent months has become noticeable, we don’t foresee expect too much further growth acceleration, as certain key leading indicators for both the economy and the residential market point towards slowing in new mortgage lending growth to come. In addition, non-mortgage credit growth has been slowing of late.

KEY POINTS

On a year-on-year basis, the value of Household Sector Mortgage Credit Outstanding grew by 4.3% year-on-year in October. This represents a further acceleration from a low of 2.0% recorded as at October 2014.

The gradually rising mortgage credit growth has contributed to a rise in overall Household Sector Credit growth from 3.2% year-on-year as at May 2015 to 4.5% by October 2015. Working partly against the acceleration in total Household Sector Credit growth was a slight slowing in Non-Mortgage Credit growth, from 5% year-on-year in September to 4.7% in October.

The acceleration in Total Household Sector Credit growth does raise a mild concern, because should it continue to rise, it could “scuttle” the multi-year trend towards a lower Household Sector Debt-to-Disposable Income Ratio, a trend we believe to have been a positive one.

There is little in the way of either positive or negative “fireworks” in the new mortgage lending environment. Around mid-2015, new bonded registrations in the Deeds Office were showing solid double-digit growth after a lull early in the year (10.6% year-on-year in the 3rd quarter). But this may be short lived, with leading indicator pointing to near term economic weakness, which we expect to begin to constrain new mortgage lending growth.

Recent months appear to have brought a slightly lower effective home loan approval rate according to Ooba stats, but it is too early to tell whether this is the start of any trend change, or whether it is merely normal month-to-month volatility. Recent renewed interest rate rises may have played a role.

The home loan interest rate differential above Prime Rate has been gradually declining, however, as the mortgage market gets mildly more competitive on pricing.

Investec and to a lesser extent Firstrand have been the 2 noticeable Mortgage Market Share gainers in recent times.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.