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Wed Sep 28 02:05:12 SAST 2016

Mortgages under strain

AZIZZAR MOSUPI | 23 September, 2016 07:30

Image by: Gallo Images/iStockphoto

More and more South Africans are struggling to pay off their mortgages as a result of the current economic "slow puncture".

This is according to credit and property experts, including consumer credit bureau Compuscan and FNB household and property sector strategist John Loos.

In the first quarter Compuscan found that people were struggling to keep up with their vehicle and asset finance loan repayments. Their recent data shows the trend has filtered through to mortgage payments.

Jacobus Eksteen, senior data analyst at Compuscan, says the data show that people are struggling financially.

"Consumers tend to prioritise their mortgage payments as this type of debt is usually taken very seriously by consumers," says Eksteen.

"They have a lot more to lose if they don't make payments on this type of account, so the trends we've seen in our data leads us to believe that consumers are feeling burdened financially."

According to the bureau, the number of mortgages that were subject to "adverse enforcements" increased from 1,500 to 23,300 from the first financial quarter of this year to the second quarter, with the number of mortgages in arrears by three or more months increasing 7% quarter on quarter.

Compuscan also showed that it is not the lower income demographic that is feeling the pinch the most, with mortgages of R3,000,000 and more also missing payments.

Loos said while the situation was not rosy, it was not cause for panic.

Citing the National Credit Regulator's data, the strategist said the situation was nowhere near as concerning as it was between 2008 and 2010 after the global economic downturn.

The NCR's data shows that the number of mortgage accounts defaulters for the first quarter are mostly found to be behind by up to 30 days, with 4.2% of total mortgages in arrears.

Defaulters of three months or more were the second-highest group, with 2.8% of total mortgages in arrears by 120 days or more.

Loos says the current value of 9.3% of mortgages in arrears is incomparable to the 16% of 2009 - the highest in the last eight years.

Improvement may be slow. "We're experiencing an economic slow puncture. We don't look like we're getting anywhere in the near future."


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