“With the banks making it more difficult to obtain money for non-appreciating assets, the era of easy credit and spending on non-essentials is, I believe, at last giving way to one in which the spending patterns are more in line with South Africa’s traditional saving habits – in which a house purchase once again becomes the overriding priority for many South Africans.”
John Smyth, CEO of Multi NET Mortgages, says that he agrees with John Loos from FNB that ongoing pressure on net wealth is likely to ultimately lead to a rise in household sector savings.
“With the banks making it more difficult to obtain money for non-appreciating assets, the era of easy credit and spending on non-essentials is, I believe, at last giving way to one in which the spending patterns are more in line with South Africa’s traditional saving habits – in which a house purchase once again becomes the overriding priority for many South Africans.”
One of the few encouraging statements in John Loos’s latest report, says Smyth, is that increased pressure on consumer finance brought about by the current low growth trends in the economy have not as yet resulted in increased financial stress. Insolvencies, Loos has reported, continue to decline.
Although the situation may not last well into 2016, says Smyth, and although a healthier debt to disposable income ratio is now not likely to come about for at least another year, there is considerable evidence that South African consumers are maturing, becoming more responsible and again setting their sights on owning a home.
“In the light of this evidence we can, as I have said before, expect the household financing sector to continue to obtain reasonably satisfactory turnovers, even though there is now so much negative economic sentiment out there and so many factors, which on the face of it might seem to make savings and a ‘look-to-the-future’ mentality hardly worthwhile."
He says as bond originators they will continue to foster and encourage this and “attack the easy-spending mentality” of two or three years ago.