FNB and Building Loans 2014

So in the past if you had a building loan of 100% and you paid your deposit of 10% upfront you could get your 10% back when completed but now FNB has changed their mind.  Or so it seems for now.

Is this because they expect an interest rate hike or is this due to results on their loan book thats not that great and they need to show better results - we will wait and see.

In the past customers were granted a a full Building Loan of 100% by FNB and were required to pay a 10%
deposit upfront even though they had the bond,  which would be possible to get paid back upon completion of the building with some FNB based rules attached - well, this offering was known to some as the “Building Loans cash back” offering.  Nice deal!

But that is gone folks.

The cash back offering on Building Loans which allowed qualifying customers to redeem their 10% deposit upon final completion of the building, will be withdrawn by FNB as from 1 October 2014.

So, the FNB rule for Building loans and their Loan Policy will only cater for building loans as follows:

• Up to 90% LTV for property values up to R 3, 000, 000.00

• and 85% LTV for property values exceeding R 3, 000, 000.00

But get your mortgage originator to check for you

Be interesting see what Standard bank, ABSA and Nedbank do next.

Investors and The Elections - What next?

I do think that investors need to be aware that there are some other issues that are playing out that will give us some direction in the future. Thanks to David te Brake from Pioneer for the input.

The Platinum belt strike is becoming a very meaningful stand-off between the Unions and Business.

The Rand / Dollar exchange rate is being affected by some of SA’s weak economic data. Some of the key issues are the current account deficit, the budget deficit, possible lower tax collections, the financing of both these deficits, high unemployment, low job creation, inflation, rising interest rate and the lack of priority for infrastructure spending, as opposed to wage and grant increases. These issues play a much greater role in your investments than the noise around the election.
The markets have continued to perform reasonably well this year; and people keep questioning this. The sad reality is that the rand looks to be on a declining trajectory, and this weaknesses has continued to help push our markets up. This is because a lot of local businesses in South Africa have got operations outside of South Africa and those profits help the markets a lot.

The three year decline of the Rand against major currencies is a serious concern; however there is nothing meaningful that is being done to stop further declines.

The only thing that may reverse this trend in the short term is a massive increase in resource prices (gold & platinum) and to be effective, that increase would have occur and be in conjunction with a speedy resolution of the mining sector strikes. It is no good if the prices rise and our mines are all closed.

We seem to be hoping for larger and larger miracles without addressing core economic issues, and sadly none of the political parties that I have observed have really come forward with proper plans to reverse this trend. They are all shouting out the same cliches in their promises – they’ll all create jobs, they all promise to stop corruption, they all promise to improve infrastructure, etc.

I think it is prudent for investors to possibly be looking to increase their offshore exposure in the future to hedge against this currency decline so getting the best out of money transfers from South Africa is key.

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10 Reasons why budget speech will matter in 2014

Forget about staying in bed, Pravin Gordhans’ 2014 budget speech today is

Min Pravin Gordhan

bound to get your blood up one way or the other.  I feel it is all about managing the budget deficit and spending on social needs and ensuring standard economic growth.

Why does the budget speech for 2014 matter?

1.       We need to make sure we balance social spending versus making sure we grow economically. A big balancing act from Pravin Gordhan.

2.       It is the 5th democratic election year since 1994. Listen to the 2014 budget speech and then also listen for budget allocations and any changes on taxes.

3.       Listen if the budget speech will contain steps to cut state spending and lower taxes.  A high hope.

4.       Will this force Unions to stage more protests for job creation – will the growth be part of the speech?

5.       Will the budget speech support job creation as a whole and stimulate economy.

6.       Can we expect sin taxes to go up on tobacco and alcohol?

7.       If the budget is not managed expect a broader tax creep such as addition tax types.

8.       There is almost certainly going to be an increase in the fuel levy tax – this is keeping fingers crossed time.

9.       Being an election – someone is going to get a windfall to boost election votes- watch this space.  I will apologize if wrong!

10.   2013 has been financially tough on all South Africans – will there be good news in the wings!

We will publish the full budget speech 2014 by Minister 

The Roman's Pizza CEO Challenge - a property switch