GROWTH in South African mortgages and household debt is shrinking and approaching negative territory, analysts said yesterday.

Reserve Bank data released yesterday indicates that the mortgage and household debt growth rate fell from 4,8percent in September to 3,6percent in October, driven by rapid declines in residential mortgage advances.

Total credit extended to the household sector, which includes mortgage advances, fell to 2,3 percent year on year in October, from 3,1percent in September.

John Loos, property strategist at FNB, said the declines in mortgage and household credit came as no surprise.

He said: "We can expect the growth decline to continue through much of 2010. This should include a period of negative growth both in mortgage loans outstanding as well as total household sector credit.

"The most recent figure for the debt-to-disposable income ratio was 76,3percent (second quarter) which, while not at a crisis level, remained near the historic high reached early in 2008."

Absa's house price index shows the average house price fell by 1,3percent between January and October compared with the same period last year.