Has there been less interest in repossessed house purchase lately? A report from the National Credit Regulator, published today, shows how lending on cars and furniture surpassed new mortgage lending for the first time in quarter 1 and quarter 2 of this year as banks tightened mortgage lending and consumers kept from borrowing. Surely all of us are aware of how the credit crisis has influenced decisions on debt for repossessed housing as well as consumer credit. The sad fact is that you’ll probably still need a loan for the repossessed house you’ve been eyeballing.

The R19bn lent as secure credit, secured mainly against vehicles and furniture, passed Mortgage lending of R18,9bn in the first quarter. The regulator’s latest Consumer Credit Report shows new home loans fell further to R17,7bn in the 2nd quarter as secured credit grew to R18,8bn. In addition, the gross debtors’ book, comprising loans of all types extended by banks, retailers, vehicle financiers and smaller credit providers that make up 90% of the market, fell in the 2nd quarter for the first time, albeit less than 1%, to R1,14-trillion from R1,15-trillion in the 1st quarter.

Mortgage loans still remain to be the largest component of consumer credit. Through the second quarter, home loans accounted for R732bn, or 64%, of the gross debtors’ book. In the first two quarters, household debt remained high, above 76% as a proportion of disposable income.

“For the first two quarters, the interest rate cuts (that started the previous December) hadn’t worked through. Also, companies had started retrenching by then. Consumer confidence was negatively impacted,” said Liberty Life consumer economist Tendani Mantshimuli.

Nomsa Motshegare, the regulator’s chief operating officer, yesterday said the effects of recent interest rate cuts would only start to be felt in the coming year. “The debtors’ book will start growing again because banks are relaxing their (lending) criteria,” she said.

The repayment profiles of both mortgage and secured credit worsened in the 1st half of the year, with the share of credit in arrears by 120 days or more increasing. The three months to June marked the sixth successive quarter of deterioration in these measures.

“One suspects that households are sacrificing or postponing payments on large-ticket items in order to account for more immediately required expenditure,” commentary accompanying the report said.

In contrast to lending for items such as dwellings, vehicles and furniture, credit-facility lending, such as on store and credit cards, grew, with the total rand value of approvals rising 2% to R6,4bn in the second quarter from the first. This was still 26% below the figure a year earlier. Store card approvals rose a whopping 34% to R2,2bn, as one clothing retailer increased its annual card limit , Motshegare said. By contrast, the value of approvals for credit and garage cards and bank overdrafts fell quarter on quarter.

The struggling continues with the credit crisis, the question is, what is your concern? A mortgage on a house or repossessed house, or is it on items of dispensable nature? If you don’t have any concern, why not consider repossessed houses? Repossessed houses are readily available for becoming your home or your investment.

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