Drop in Interest Rates?

Well the news seems positive towards a rate cut.

If we look at the US keeping rates down for 2 years and the state of the finances on the Eurozone this spell better times for property owners and buyers in SA.

This seems to be a great time to transfer money to SA or send money from UK and invest in property at a decent interest rate.  With the Rand being up against the Pound this is even better.

Rate cut expectations grew yesterday as Finance Minister Pravin Gordhan and Reserve Bank governor Gill Marcus warned of the dangers posed by unstable global markets.

Speaking at separate events, the key financial policymakers highlighted contagion risks from abroad.

Marcus told the US Chamber of Commerce in Johannesburg that the global economy was “moving perilously close towards a precipice”. And she said: “In the event of a significant global downturn (South Africa’s) monetary policy will react appropriately.”

Gordhan said at the Banking Association’s summit: “The uncertainty of the stability of the European banking system, the European sovereign debt crisis and the recent US downgrade constitute serious downside risks.”

Marcus’s comments were interpreted as a sign the bank’s repo rate could be cut further from its 30-year low of 5.5 percent. Citi strategist Leon Myburgh said rates on forward rate agreements fell 10 basis points in the morning.

Until late last week, they had been signalling a rate hike but they changed direction on Friday, Myburgh said, after a week of poor economic data at home and abroad.

Before last week’s market turmoil, the market expected the next move would be up.

Citi economist Jean-Francois Mercier said Marcus’s comment did not signify “an imminent cut” but suggested the bank’s monetary policy committee would ease further if the global situation kept deteriorating.

He said: “The start of policy tightening now appears a long way off, maybe not before the second quarter of next year at the earliest.”

Marcus referred to South Africa’s disappointing second quarter performance, with manufacturing and mining “likely to have subtracted growth”.

And she cited second quarter growth of only 0.2 percent in Germany, the “powerhouse” of Europe, and the revision of US first quarter growth from 1.8 percent to 0.4 percent as evidence of “a synchronised downturn in advanced economies”.

Both Gordhan and Marcus quoted the work of researchers Carmen Reinhart and Kenneth Rogoff, on lessons from financial crises. Reinhart and Rogoff divided financial crises into three phases: a prolonged fall in asset prices; a fall in output and employment; and finally an explosion in government debt.

Gordhan noted: “Internationally, we are seeing the third phase in full swing.”

Reflecting fears of sovereign risk, gold continued to break new records early yesterday, as the market bet that the US Federal Reserve would announce a new wave of quantitative easing at the weekend.

Recent market moves carry some benefits for South Africa. The rand, which traded at around R7.22 against the dollar yesterday, is weaker than its R6.60 level in April – a potential benefit for local manufacturers.

And a falling oil price could offset the inflationary effect of the weaker currency .

Also good news is that the Reserve Bank reported yesterday its lead indicator rose in June to 133.8 points from 131.4 – reversing a downtrend, with seven of its 10 available components positive. This points to possible economic resilience

Send money to SA now.

Interest rates set to climb??

Is it my imagination or is everyone trying to force the interest rates to climb by speaking about it in the media??

Or am I being paranoid?

Interest Rates DROP again...

Well good news for those of you that own property in South Africa.
Interest rate cuts have been issued again, with the government and reserve bank trying to decrease the stregnth of the RAND against the DOLLAR.

Rate cut 0.5% = Current Interest Rate = 9%.

LOVELY!!!!

MARKUS MAKES MORTGAGE MAGIC! PRIME RATE DROPS.

What an amazing day and date - the same interest rate as the 20th August 1979 - Gill Marcus you beauty. 

Marcus revealed the following before announcing her decision:

• Domestic inflation has moderated;
• Growth expected to remain low;
• Inflation to average 4.8% in 2012;
• Food prices remain benign;
• Inflation expected to be at 3.7% Q3 2010;
• CPI to average 5.1% in final quarter of 2012;
• Fears of reverse recession have diminished but risks still remain;
• Bank does not target exchange rates;
• Policy rates to remain low in developed economies;
• Rand main downside risk to inflation;
• Inflation moderated more than expected;
• Bond flows show fundamental shift;
• Growth to moderate further in H2;
• Domestic economic growth declined in Q2 in 2010, due to contraction in mining sector; growth in second half to be moderate;
• Consumers still constrained by debt;
• Household consumption may moderate; will be constrained by increased unemployment;
• Banks forecast of GDP growth has declined moderately to 2.8% in 2010;
• Impact of World Cup expenditure unclear at the moment;
• Underlying credit extension remains weak;
• Wage settlements main inflation risk and may affect employment;
• Growth to reach 3.2% in 2011;
• Low interest rate and inflation to support consumer;
• Increase productivity is needed;
• Administered prices place upside pressures on inflation outlook;
• Rand is stronger than anticipated.


So this is what it looks like thanks to Globalfundi our mortgage originators.

SARB no surprise – policy rate unchanged

The Reserve Bank’s decision to keep the repo rate at 6.5%, reflects the view that GDP growth will remain relatively subdued and does not pose an upside risk to the inflation outlook.

Other potential drivers of inflation are also anticipated to remain relatively muted over the medium term (with risks mainly emanating from the global environment), hence for inflation to remain comfortably within the target range in the rest of 2010, 2011 and 2012.

The SARB will continue to assess developments and will adjust the monetary policy stance when necessary.

So FOR now, for all us English speaking citizens of South Africa, the cost of your home loan will remain the same!

WizardMan OUT!

EASTER BUNNY EASTER SAVINGS

So a Happy Easter everyone

savings from the banks on your home loans comes in different forms!

But I suggest you rely on yourself if you want it to work.  Waiting for Standard bank, ABSA, FNB or Nedbank w'ont work even though they are all offering 10% as prime now.  Sure you will save a few rand this way, but better ways are:

Pay a second bond payment every second month of R 100.00, after your debit order goes off.

• You will always be paying a R 100.00 plus compounded interest against your home loan for the next 20 years or so.
• Your score will improve at the bank
• You can apply at a branch for a better rate - because you are an early payer

If you are Paying a mortgage overseas or from overseas the you must use this forex  service
as you pay NO TRANSFER Fees!!!!!!

Negotiate with your lawyers for a discount on conveyancing fees.

So be your own Easter Bunny!!!  You little devil you!!!

10% rate So whats my savings!

 For every R 100,000.00 home loan you save a minimum of R 33.36 per month or R 8,006.40 over 20 years

If you have a R 500,000.00 mortgage you save a minimum of R 168.79 per month and thats a whopping R 40,509.60 over the 20 years - the price of a second hand car.

Thank you Gill you are on the Marc(us)

Market Update - GBP / ZAR - what do the UK Forex boys say!!!

The South African Reserve Bank cut interest rates yesterday in a move designed to slow down the rapid appreciation of the Rand. Moving rates down to 6.5% the bank expressed concerns that the currency's strength may hinder exports and derail the fragile economic recovery. At 6.5% the Rand remains one of the highest yielding currencies, and has benefitted from strong investor risk appetite and low yields elsewhere (just 0.5% in the UK for example).


Now what do you say!!

NEDBANK - A GREAT Balancing Act - to get a Home Loan!!!!

Well I am impressed when I hear a  credit manager tell me what is needed to get a home loan - open policy - nice to see Nedbank .

Three pillars of strength needed folks - thats all so YOU WANT A HOME LOAN then -

RISK - You need to make the bank feel that all the risk is not only on their shoulders but also on yours.  So what do you need for this - A deposit reduces the banks risk and adds yours into the pot, so start saving.  Be a smart finance manager, so manage your accounts and VERY VERY important PAY YOUR ACCOUNTS ON TIME or in ADVANCE.  Never pay late.  Nedbank, like most banks have an internally risk rating of you as a client, so contact your Mortgage Broker and get your risk rating in advance, THEN apply for a mortgage only.

SECURITY - Well no one wants to be left hanging and neither do the banks and this is not particular for Nedbank only.  So make sure what you buy is acceptable for the banks to finance.  If a sectional title flat or apartment get the body corporate financials and make sure the body corporate is in the black (positive cash flow), not to many arrears and outstanding levies, and up to date paid insurance.  Then the bank will feel comfortable as well.  If you have just started a job, make sure you supply your job contract together with a payslip.  Its all about feeling secure. 

Ask your broker.

AFFORDABILITY  - If you want to be declined then dont justify what you can afford.  Remember 30% of your income is the MAXIMUM that the banks will allow you to spend on your home loan.  THATS IT!

DO NOT INFLATE YOUR SALARY AND INCOME! OR DEFLATE YOUR EXPENSES! If it is unrealistic the banks will automatically add an additional 25% to your expenses and once declined on affordability it is very difficult to convince credit managers otherwise.  IT IS TO PROTECT YOU afterall!!!!!!  Ask your mortgage advisor to assist you before you have a bash yourself.

Lovely, easy and A GREAT BALANCING ACT!

Interest rates in South Africa - possible insight from Std Bank

Speculation is mounting that another rate cut is in the pipeline. Markets will be critically assessing economic data releases ahead of the next rate decision on 25 March.

Given the generous degree of monetary policy accommodation in the system, our econometric analysis suggests that the data will have to be extraordinarily weak to augment the case for another interest rate cut.

Probabilities of a rate cut are estimated for a range of indicators and their outcomes ahead of the next MPC meeting. We also flag the risk of pipeline price pressures that may arise as a result of the change in the inventory cycle and concomitant availability of credit within a loose policy environment.

The Finance Minister will also address inflation targeting next week. In all likelihood, inflation targeting will remain the status quo.

Will South Africa get another Rate Drop

So there's alot of talk and speculation again about another interest rate drop....

24 out of 26 economists in a Reuters poll last week predicted that the MPC, which has seven members, will lower the Bank’s key repo rate by half a percentage point to 7%. That would bring the cumulative reduction over the past seven months to five percentage points, taking prime lending rates back to the level they were at in 2003.

Electricity utility Eskom is asking for a 34% tariff annual increase.
So while producer inflation has braked sharply, consumer prices remain high and central bank governor Tito Mboweni warned after last month's meeting the policy committee was unlikely to go for more big cuts.

Powerful trade unions, close allies of the ANC, have demanded more action from the Reserve Bank and government to save jobs and propel the economy out of recession.

For additional articles relating to the potential rate cut:

http://www.businessday.co.za/articles/Content.aspx?id=73758

http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-25_2531251

http://www.moneyweb.co.za/mw/view/mw/en/page87?oid=298839&sn=Detail

Repo Rate

So, even with all these public holiday's we've had this month, the government still managed to find some time to give us a little break in home loan repayments and save us all a little money.

Tito Mboweni and the South African reserve bank decided to drop the repo rate by 100 basis points. Thanks to Tito once again and thanks to the SA government.

So far, Zuma, you've got my first 2 thumbs up ;-)

Happy April everyone. Enjoy the public holiday.

Interest Rate is now 12%