Mortgage Variables, Monetary Policy and Consumption

Abstract

This chapter builds on Chapters 4 and 5. The preceding chapters examined the importance of the indirect channel of household wealth on consumption, and how this varies with house size, and the importance of disposable income for different consumption categories. This chapter discusses the role of mortgages in South Africa and investigates the importance of the housing market including lending and credit supply shocks. We extend the study to account for the directional push effect of developments in the US housing market on their South African counterparts. To what extent are the spillovers from the US residential investment and house price important in accounting for the deterioration of the South African housing market during 2009 and thereafter?