The emerging view of the rand is that it will respond to changing fundamentals in an orderly manner. Rising income levels, improved confidence and lower interest rates have bolstered credit extension, resulting in banks’ loans and advances to the domestic private sector increasing by 21,5 per cent over the twelve months to September 2005.
Mortgage lending has been exceptionally strong, supported by rising property prices. Average house prices rose by more than 15 per cent over the past twelve months. However, this is already significantly slower than the 35-percent peak rate of increase recorded approximately a year ago. As a counterpart to the increases in bank loans and advances, the monetary aggregates have also been rising briskly.