Growing US home loan defaults could be contagious
Pretoria - The increase in home loan defaults in the US could affect the South African housing market and economy, Standard Bank warned in its latest residential property gauge yesterday. It said slower US growth might hamper local exports and commodity prices, which in turn might slow house prices through reduced economic and income growth. In addition, there may be contagion to global housing markets to the extent that investors regard residential property as a single asset class and equity prices may soften if the mortgage lenders and buyers of their securitised assets experienced a further deterioration in their earnings and loss experiences. However, the bank said in the final analysis the fallout in the US subprime mortgage loan market "as it has occurred so far" had little effect on local house prices.
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