bank foreclosures south Africa

bank foreclosures south Africa

bank foreclosures south Africa Foreclosure business news.

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Bank foreclosures South Africa Homes signal rate bite

October 26, 2007 By Mzwandile Jacks found at http://www.busrep.co.za image found at south.africa.house.for.sale

house for sale South Africa near Johannesburg Johannesburg - The number of notices of sales in execution rose by two-thirds in June compared with the same month last year, indicating that interest rates were beginning to bite.

Bank foreclosures as a result of mortgage holders failing to make their bond repayments had jumped to an average of just over 1 000 a month in June this year from 600 last year, experts said yesterday.

John Loos, a property strategist at First National Bank Commercial, attributed the current rise in sales in execution to the interest rate hikes that were beginning to increase the risk associated with lending in residential property.

Although the increase in sales in execution during this period was below the 2001 and 2004 figures, he said, it did not augur well for the near future. During 2001 and 2004, the figures were closer to 2 500 per month, he said.

Historically, only about 30 percent of notices for sales in execution resulted in actual sales. Loos said this was because some mortgage holders managed to sell their property independently or made other arrangements to finance their mortgage payments.

"We could expect to see sales in executions rise to around 300 per month over the next year," Loos said. "Based on this conservative estimate, this would amount to R215 million worth of properties being repossessed each month, with the bank and owner likely to recover, on average, only 62 percent of the market value of these properties."

But Andrew Watt, the business development director at Lightstone Risk Management, said the incidence of sales in execution across different market segments differed widely.

Mortgage holders in the mid-market were "most feeling the effect of the interest rate rises", Watt said.