Latest updates snapshot:
Home Loan Industry News:
How Discovery’s ‘up to 1%’ interest rate discount on home loans will work
MoneyWeb:
Discovery Bank, in partnership with SA Home Loans, is introducing a home loan product that offers up to a 1% discount on interest rates, linked to clients’ financial behavior and product choices. The loan uses the Jibar as a base rate, adjusted for risk profile, with further reductions for good financial management.
South Africa’s top residential eco-estates
Daily Investor:
New World Wealth identifies residential eco-estates, or wildlife estates, as a growing trend in South Africa, with top locations like Elephant Point and Royalston providing unique living experiences alongside conservation efforts, especially for endangered species like Africa’s Big 3 Eagles.
South Africans cannot afford their homes but also can’t afford to sell them
The Citizen:
South Africans facing a nearly 40% increase in home loan payments since 2020 are caught in a bind, with the high costs of selling a home, including legal fees and compliance certificates, adding financial strain. Bridging finance offers an alternative, providing a cash advance against the sale proceeds to mitigate these challenges.
South African property owners are selling up – desperately looking for service delivery
BusinessTech:
South African homeowners are moving due to a desire for better utility and municipal services, with 43.7% of transactions in Q1 2024 driven by this need. The FNB Property Broker Survey indicates that deteriorating infrastructure and services, including load shedding and water issues, are major factors influencing property sales.
Standard Bank in ooba Solar loans collaboration
MoneyWeb:
Standard Bank and ooba Solar have partnered to offer South African households improved access to affordable solar financing options, with loans starting at prime plus 1% and flexible repayment terms. This initiative aims to facilitate the transition to solar energy by providing additional funding for home improvement projects like solar installations.
Bad news for home owners in South Africa
Daily Investor:
Selling a house in South Africa incurs average costs of over R150,000, with expenses spanning from bond cancellation to compliance certificates and moving costs. This financial burden, combined with the slow processing of sales, adds stress to sellers amid a property market facing excess supply and constrained demand.
Sectional titles and complexes are booming in South Africa
BusinessTech:
Sectional title homes in South Africa saw a price growth of 1.8% in Q4 2023, surpassing the growth of freehold properties for the first time since 2004. Accounting for 67.4% of all investment property sales in 2023, these properties appeal due to affordability, security, communal amenities, and prime locations.
Is a pension-backed home loan a good idea?
City Press
A pension-backed home loan allows individuals to use their retirement savings as collateral for a mortgage, offering an alternative for those with substantial pension funds. This option, governed by strict regulations, requires careful consideration of factors like collateral, loan eligibility, interest rates, and repayment structures.
Tough times continue for homeowners and the property market
BusinessTech:
The SARB’s decision to keep interest rates unchanged leaves the repo rate at 8.25% and the prime lending rate at 11.75%, continuing the financial strain on indebted South Africans. Despite stable rates potentially benefiting the property market, experts argue the high interest has hampered economic growth and property sales.
SARB decision likely means property market activity remaining mediocre
CBN
FNB expects mild interest rate cuts in H2 2024, anticipating no immediate improvement in the commercial property market due to unchanged rates, economic weakness, and pre-election caution. Property valuations and new development are likely to stagnate, with a potential mild rise in commercial vacancies, particularly in office and retail sectors.
Interest rate pressure ready to burst
BusinessTech:
Economists anticipate the commencement of a rate-cutting cycle in June, following prolonged “higher for longer” interest rate policies. Despite global inflation challenges, pressure mounts on major central banks to ease policies. South Africa, influenced by global trends, especially the US Fed, may see a cautious and gradual reduction in rates.
Discovery says 60% of its bank clients have ‘mispriced’ home loans
MoneyWeb
Discovery plans to launch its home loan offering, targeting a significant opportunity in the R1.4 trillion mortgage market with a compelling product designed around shared value, promising interest rate reductions for 60% of its banking clients. Administered by SA Home Loans, this initiative aims to penetrate its existing client base.
Property Economics News:
South African banks are opening the taps – but not for everyone
BusinessTech:
South African banks are cautious with consumer lending due to high non-performing loans but see opportunities in public-private partnerships, particularly in sectors like renewable energy and infrastructure, leveraging government initiatives to address service delivery challenges.
Expect more tough pricing news for South Africa next week
BusinessTech:
South Africa’s consumer inflation is expected to continue troubling the economy with rates projected to remain above 5.0% in March, influenced by rising fuel prices and other costs. Despite slight projected decreases, the inflationary pressures across various sectors are likely to delay any potential interest rate cuts.
Big interest rate shift on the cards for South Africa
BusinessTech:
The South African Reserve Bank (SARB) aims to lower the country’s inflation target from the current 3% to 6% range, potentially before 2025. This change could affect interest rate adjustments, with the SARB favoring a shift towards a 3% inflation goal but facing challenges due to rising inflation pressures.
Another blow for interest rate hopefuls in South Africa
BusinessTech:
Nedbank predicts a prolonged hold on South African interest rates, with only 50 basis points cut expected in 2024, signaling cautiousness from the SARB amidst inflation risks, including El Niño’s impact on food prices and electricity hikes. Cuts may occur in Q3, ending the year at 7.75% repo and 11.25% prime rates.
Banks will have to put greater focus on collections as consumer pressures continue
Daily Maverick
South Africa’s repo rate hold at 8.25% amidst rising inflation dampens hopes for rate cuts, with the first reduction expected in H2 2024. Rising credit use for groceries indicates growing consumer debt, affecting bank risk profiles. Increased credit impairment charges and non-performing loans challenge major banks, demanding careful lending strategies.
Middle class hanging on by a thread in South Africa
BusinessTech:
South African banks anticipate high interest rates to persist, significantly impacting the middle class with minimal relief expected in the next two years. Standard Bank forecasts a mere 75 basis points rate cut in 2024, exacerbating the financial strain on credit-burdened middle-income households amid rising costs and stagnant wage growth.
South Africa’s interest rates paused again
Daily Investor:
The South African Reserve Bank (SARB) has paused its interest rate hiking cycle for the fifth consecutive time, keeping the repo rate at 8.25% and the prime rate at 11.75%. This decision, aimed at managing inflation within the 3%-6% target range, reflects concerns over potential food price increases.
Standard Bank sees higher interest rates for longer in South Africa
Daily Investor:
Standard Bank predicts high interest rates will persist in South Africa, with inflation staying near the Reserve Bank’s upper target, leading to minimal rate cuts in 2024. This scenario benefits the bank’s net interest income but increases the risk of non-performing loans, prompting cautious credit extension and enhanced provisions.
South African banks set to lose big in 2024
Daily Investor:
South Africa’s major banks are expected to incur a R74 billion loss from unpaid loans in 2024, influenced by rising living costs and high interest rates. S&P Ratings highlighted the challenging macroeconomic environment, forecasting a 1.4% sector credit loss ratio due to elevated interest rates and food prices.
Interest rates may have peaked, yet inflation risks loom amid promising growth ahead
REI:
In 1Q24, surveyed data shows modest improvements in housing market conditions. The FNB House Price Index growth decreased slightly to 0.7% y/y in February. Despite current challenges, expectations point towards a stabilising property market in 2H24, supported by projected lower interest rates, moderate economic growth, and incremental employment gains.
Standard Bank closing the taps
Daily Investor:
Standard Bank has tightened lending criteria due to deteriorating credit loss ratios and increased non-performing loans, influenced by high living costs and interest rates. This has led to reduced credit approvals and growth in loans, particularly affecting home loans and small business lending, while loans to large corporates and governments rose.
Interest rate trouble for South Africa
BusinessTech:
Global and South African interest rates remain high due to persistent inflation concerns. Despite initial optimism from US Fed Chair Powell’s comments, recent inflation data has dampened expectations for rate cuts. South Africa’s rate cuts are anticipated in the second half of the year, following the US’s lead.
Reports:
Industry Reports
History of published reports. including FNB Property Barometer and Eighty 20 Credit Stress Report