MORTGAGE loans registered dismal growth in November.

High food prices, fuelled by drought, are expected to pile on the pain for the housing market.

The Reserve Bank’s latest data show that mortgage advances to the private sector rose 0.80% in November, compared to 3.81% of the same month in 2014.

Weak oil prices boosted the residential property market most of last year, resulting in overall growth of 5.96% for 2015. However, this will now be overshadowed by rising food prices triggered by the drought, First National Bank (FNB) property strategist John Loos said.

The drought has seen input costs for agricultural producers soaring. This is expected to drive up food prices for consumers.

"The first two obvious impacts are a negative one on real household disposable income growth — caused by potentially higher overall CPI inflation — and on the cost of credit.

"This is so because (SA has an) official inflation target and higher inflation can exert upward pressure on interest rates. The latter impact is important for a residential property market that is highly credit-driven," said Mr Loos.

SA Home Loans CEO Kevin Penwarden said the mortgage provider, which has a partnership with retail bank Capitec, had seen a significant surge of 26% in the volumes it processed last year compared to 2014, showing the property market was generally healthy and active.

"However, the economic stresses of the past year have nevertheless taken some toll," he said. "While there has been solid growth in 2015, that growth has slowed from 2014, which showed a very buoyant increase of nearly 40% over 2013."

SA Home Loans’ clients were increasingly coming under financial pressure, with many opting to use the equity in their mortgage bonds — wherein the value of their properties exceeded the outstanding loan — to consolidate more expensive short-term debt such as personal loans, credit cards and overdrafts, said Mr Penwarden.

"We have seen a strong interest in clients wanting to refinance or switch their bonds from other institutions — an increase of about 22% in 2015 from 2014. This is significantly higher than the 2013 to 2014 increase."

Marius Marais, CEO of FNB Home Loans, said it was too early to predict how home loan application volumes would pan out this year.

"Directionally, it does seem that times will be tighter for homeowners because of the weaker economic climate and currency, as well as the reality of an upward rate cycle and lower property price growth," Mr Marais said.

"Customers seeking large and long-term loans, such as a mortgage, should ensure they have the lowest-possible risk profile. It is crucial that aspirant buyers buy well within their means, and that they make an effort to understand the extent of home-related costs, which extend far beyond the bond instalment."