Interest rate and tips for your home loan!

“An interest rate cut should have some mildly positive impact on the property and home loans business.”

well that is true to some extent but you cannot just rely on this.

So some simple but sound tips for householders and the man in the street:

STAY WITHIN YOUR BUYING MEANS -  Although interest rates are at historical lows, home buyers should buy well within their means, in order to make provision for a significant degree of interest rate increase in future, these will come somewhere and somehow.

Watch the external costs - Costs related to housing such as municipal rates and tariffs are escalating at rates significantly higher than consumer price inflation.

While it is difficult to predict when these rapid increases will subside, given South Africa’s infrastructure funding needs, this makes it even more essential to borrow well-within one’s means, and ensure you read the meter and watch the leaks.

Peg your rate - Besides buying well within your own means so as to be able to absorb future interest rate hikes, because they will come, fixing interest rates is another way of being better prepared for this eventuality.  However your fixed rate will be quite a bit higher than prime.  So plan for this

Use it or ,lose it.

First the Budget Then Make a Decision first time home buyers

First Listen to the 2012 Budget Speech Then Make Up Your Mind

If you are a first time home buyer now is the perfect time to empower yourself and get in there while the going is still good.  You will soon be able to decide on buying a home, depending on the outcome of today’s 2012 budget speech.

First time home buyers take note!!

·         Interest rates are lower than they have been in decades.

·         Property prices are really, really good at this point in time.

·         Banks are easing up on their lending criteria, which is a positive move in the right direction borrowing  that much-needed money.

·         Empower yourself if you are a novice home buyer with the kind of knowledge that you will need when looking for a bond or wanting to borrow money.

·         Property is an important investment, therefore location is key.

·         Buy the cheapest home in the best area; this way you will never lose value on your investment.

·         When buying a home it is important to take convenience, access to your job, and security as well as safety into account.

·         A home close to schools is excellent for resale.

·         If the area you have your eye on is too expensive, then perhaps the suburb right next door is a good second option.

·         Noise levels also devalue homes; therefore a home in a quiet area might be a better option.

·         Interest rates are always a factor to take into account; find out first what Pravin Gordhan has to say in his 2012 budget speech, and then make your decision according to what the outcome of the latest budget as this will most certainly have an effect on finances for the next 12 months.

·         Buying a “renovator’s dream’ “is certainly an option, especially if you are deft with a hammer and nails. Buying cheap in an excellent area and doing up a home is a very good option, and many home owners find this to be the case.

·         Aesthetic flaws are obvious, but hidden problems are not that obvious when buying a home, therefore it might be advisable to have the house inspected by professionals before putting in that offer.

·         If alterations were carried out on the home, ensure that all the plans are in place when you sign on the dotted line.

Before you buy your new home, wait for the outcome of today’s 2012 budget speech, and then make your next move.

A good point of entry is to start searching for your dream home online, where you will find a plethora of choices, and also the property section in newspapers in your area of choice. A good estate agent will be able to advise you and point you in the right direction, making the whole process a lot less emotional and stressful. Some banks are giving 100% rates for bonds, but it is advisable to have a deposit in order to secure a loan, and increase your chances of actually getting that sought-after bank loan or bond.

After listening to Pravin Gordhan’s 2012 budget speech, and after doing some necessary homework and having fine-tuned your plan to buying your first home, your next step would be to approach your bank.

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What do the experts say for 2012 for the Property Market?

So what do you think is happening in the property market in SA - is it paradise to come?

This is what the FNB property barometer looks like.  Download this now.

Recently, there has been some media discussion about whether the current time is the time to buy property, on the back of some assertions that residential property market “equilibrium” has been reached. It is surely safe to say that the residential property market has become more of a “buyers” market since early-2008, with prices having declined by around -17% in real terms since February of that year (“real prices” refer to average house prices adjusted for consumer price inflation).

But it is challenging to ascertain when a market has reached equilibrium, the price level where demand matches supply, especially as equilibrium levels fluctuate over time. Reaching equilibrium would imply that demand has finally caught up with supply after about 4 years in which the market could be deemed to have been oversupplied, a state which caused the downward real price correction in the market. Reaching equilibrium would also imply no further real price decline to come, unless of course further economic deterioration in the near term caused the market equilibrium price level to decline further, because price levels required to reach market equilibrium, or (otherwise put) market balance, do change over time as economic conditions change.

We believe that indications emanating from the latest results of the FNB Estate Agent Survey suggest  that the residential market still has some way to go before it reaches that “holy grail” where oversupplies disappear and the market can finally be said to be realistically priced and, yes, in equilibrium.

The first and foremost factor influencing our view is the fact that, according to the agents surveyed, the estimated average time that a home remains on the market before being sold rose for the 2nd successive quarter in the 4th quarter of 2011, from a previous 17 weeks and 2 days to 17 weeks and 6 days.

This would suggest that the imbalance between demand and supply has deteriorated further recently. The recent average time on the market remains far above the 2 month level, and even well-above 3 months, levels which we would deem necessary to reflect a market with a “healthy balance between supply and demand”. There has been a broad trend of increase (deterioration) in the average time on the market since early-2010, after something of an improvement in 2009 on the back of major interest rate cuts.

The second indicator of pricing realism, namely the estimated percentage of sellers being required to drop their asking price to make the sale, has also shown the resumption of a broadly rising trend from late-2010 through 2011, and currently hovers around 90% of total sellers. Whilst one would always expect a significant percentage of sellers to “open the bidding” on the high side, the current percentage would appear to be extremely high when looking back to the lower percentage of sellers dropping their asking prices in years prior to the 2008 recession. In addition, 2011 showed further increase in this percentage, which is not what one would expect to see in a market getting nearer to equilibrium and price realism. While an additional survey question, regarding the average estimated percentage drop in price by sellers being required to do so, has only been asked for 2 years, we have seen a mild increase in the average estimated price drop from -11% early in 2010 to -13% by the end of 2011.

Therefore, the sample of estate agents surveyed during the 4th quarter of 2011 would not appear to believe that the residential property is yet realistically price given the level of demand, or otherwise put, they appear to imply that the market is not yet in equilibrium or “balance between demand and supply”. Admittedly, the appropriate average time on the market is debatable, but we believe that above 17 weeks is inappropriately long. This, we believe, requires either further real house price decline, or alternatively residential demand needs to strengthen considerably to catch up with supply.

And at this stage, the agents aren’t pointing to a positive move in residential demand. A key question posed to estate agents in the survey is with regard to their perception of residential demand strength, done on a scale of 1 to 10 with 10 being the strongest possible level. After a mild strengthening in the demand rating in the 3rd quarter of 2011 to 5.87, the 4th quarter (normally a seasonally stronger quarter) saw a mild decline to 5.66. In year-on-year terms this represents -2.2% decline on the 4^th quarter of 2010. Agents have not perceived demand to have made any meaningful progress in terms of strengthening, following a significant surge from mid-2009 to mid-2010. This shouldn’t be surprising, given that since late-2009, there has been very little further interest rate reduction, and little support from a very mediocre economy.

In terms of expectations of demand in the near term, the 4th quarter agent survey returned a weak response, with a very significant drop in the percentage of agents expecting demand to increase, from 44% in the previous quarter to 17% in the 4th quarter. This was the lowest percentage of respondents expecting strengthening since the 2nd quarter of 2005.

When asking agents for the factors influencing their near term expectations, seasonal factors play the most important role in this deterioration by far, because at the time of the 4th quarter survey in November, they were looking at 2 months of quiet time ahead as the holiday season approached. However, there are certain other negative factors that have are significant, including the perceived “strict credit environment,  “economic stress/general pessimism”, and still-unrealistic pricing by many sellers.

Also significant, is that only a few agents (7%) still see interest rate levels as still being a positive. The last rate cuts took place in 2010, and the stimulus from rate cuts has worn off.

In order to eliminate the strong influence of seasonal factors, we aggregate the results for near term expectations on a 4-quarter moving average basis, and the result is what we call the FNB Home Buying Confidence Indicator. The Indicator is on a scale of -1 to +1, with a -1 number assigned to a “weakening expectation” by an agent, a rating of zero to an “unchanged” expectation, and a +1 rating to a “strengthening” expectation. Here we see the 4th quarter Home Buying Confidence Indicator declining mildly on the previous quarter’s level, from 0.25 to 0.19.

The agents surveyed, therefore, appear to have become more pessimistic in their near term expectations, seasonal factors aside.

The Estate Agent Survey thus appears to support our opinion that further real house price (house prices adjusted for consumer price inflation) decline is required in the near term in order to shift the residential property market towards a balance between demand and supply or, otherwise put, equilibrium.

Therefore, at this stage, the residential property sector would be sensitive to any unwanted surprises in the form of an interest rate hike at this week’s Monetary Policy Committee (MPC) meeting of the Reserve Bank. Fortunately, at this stage such an event seems unlikely, with the expectation that CPI inflation is nearing its peak, after which it is expected to decline back into the target range of 3%-6% without requiring help from interest rates at this stage

Interest rates set to Drop???

So with SA consumer inflation raising by 0.3% from June to July a lot of pressure is being put on the SA Reserve Bank to drop interest rates and curb the rising inflation.

This is great news for those buying a home and looking for a mortgage or home loan, but bad news for those wanting to save.

Take the elder for example they seem to live off the interest from investments and this will smack them hardest.  The younger folk are OK but as the balance of Old versus young swings and people are living longer it seems like those inflationary measures are now no longer working and the drop of interest rates do not tend to increase spending as before.

So those who want to buy and invest into SA may want to make free money transfers to SA and benefit from a better rate and those who want to save, finance a property as a syndication or family group and speak to your best mortgage and financial planner.

We feel that this is the tend between now and the second quarter of next year and with the Eurozone in a quandry, US keeping rates as they are, Gold taking a smack as investors realised cash yesterday and the Libyan situation where it is, its time to only take a long term view and invest in property.  Buy low.

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?

Your Home Loan and your Credit record

A home loan is a loan that makes the dreams of people to have a private dwelling of their own in a quicker and easier way. So if you are you looking for a home loan then you have come to right website.



I know you have your own fears when it comes to a home loan application and there are things you need to know before even signing an offer to purchases to avoid disappointments.


The very first the thing is to know your credit record.


This is very crucial in a home loan application, slow payments reduces your credit score and affects your credit record.


Your credit score is a number calculated from factors such as the amount of credit outstanding versus how much you owe, your past ability to pay all your bills on time, how long you've had credit, types of credit used and number of inquiries.


Some may argue and say I was late by one day but that will certainly reflect as a late payment and its one thing you must never do as one day it might cost you your dream home and affect your credit record and credit score.


Then comes adverse and judgments, what effect do they have on your home loan application? A judgment against you is the result of you losing a case in court. Usually, a creditor goes to court to get a judgment against you for the amount of the debt you owe.


Well with that, the first impression the creditor gets of you is you are a high risk client and your chances of you not paying back a very high there by reducing your chances of getting a home loan. The consequence of a negative credit rating is typically a reduction in the likelihood that a lender will approve your home loan application for credit under favorable terms, if at all.


Interest rates on home loans are significantly affected by credit score and credit history; the higher the credit rating, lower the interest while the lower the credit rating, the higher the interest. The increased interest is used to offset the higher rate of default within the low credit rating group of individuals.


Then next thing is affordability, know how much you qualify for.


Unfortunately banks no longer do pre qualification on home loans but that does not mean you won’t be able to beforehand. Apply here for an affordability qualification for you. and we will take you through the process of your personal home loan application.

L your mortgage consultants.....

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.

Should I buy, fix, sell and get RICH!!!!!!

Yesterday, I bought a PIP (Yup! a property in possession). 
Thank heavens some other sucker could not afford to pay his homeloan.
I scored, I really, really scored as I could raise some money
from my other homeloan for this house. Oh, what a bargain!

Now, I am going to do quick, fixit, with my gardner and a couple of guys off the street who walk around carrying paintbrushes and ladders with card board adverts.  They are really so cheap and desperate for work that a few more bucks will sort that out.

Then i'll sell it on Private property so that i do not need an agent and I'll save myself a fortune.

Speculation, the mothers of invention. (Sic)

So whats the reality in property!!! Or does reality exist in properties in possession!

Owning property is no doubt great.  Owing the bank money for the property is not so hot, but the truth is not all of us have hard earned cash!!

Second mortgages, even third and fourth ones to cover that little speculative property, can be great when things are good and you have rental income, but not so great when the burning hole in your pocket hurts like crazy.

A quick fixit, can also be a quick drain on cash, especially with no recourse and no guarantees.  so be careful.

Choosing the right place and area.  That is tough to answer.  Position, position, position means cost, cost, cost - You pay big time, for the big view.  So keep these thoughts close and keep your head at all times.

The key thoughts are, are there people with money.  Parents with student kinders.  Older folks needing places without stairs.???

Real estate agents actively active in the area.  Do properties move in the area.  Do the banks finance in the area.  That information is always available for you. get a great real estate agent or mortgage originator to assist you.  they will, they want your business.

Oh, yes, please do not forget, selling means you need buyers.

Selling means you need a nice place for someone who wants it with things that work.

so, let us hope that your painter with the ladder is not the owner of the PIP!!!!  mmmmmmmmmmm

be cool, be cool!!! Its still a good deal, just make sure you prepare yourself well -- ask the debt doctor he can tell you everything

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!

Prime Rate DROPS! Awesome Times!

The South African Reserve Bank this afternoon announced a reduction of 0.50% in the repo rate, which will result in the banks’ prime lending rate reducing to 10.00%.

All the necessary changes to our systems will be effected this evening to ensure that our affordability calculators for home loan applications and pre-qualification applications will reflect the new base rate of 10.00%.

This is GREAT NEWS!!!

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.

Interest rates remain unchanged

News Flash: Michael Jackson passed away last night! A sad time in the history of music! A man light years ahead of his time, and the most influencial pop musician of ALL time. His music will sorely be missed by all, but a legacy will always remain!

Tito Mboweni's decision yesterday to keep rates unchanged has shocked some, but with inflation levels staying at around the 8% mark, it's no wonder.

After dropping the interest rate more than 5 times this year already, and inflationary levels not dropping at quite the speed the reserve bank were hoping, Tito's decision remains a solid one.

There's loads of speculation out there with talks about rates going back up and people needing to fix rates now, but with GLOBAL economies sitting at the levels they're currently sitting at, it's not possible. If anything I believe we'll see a another drop in the next month or two and then we'll stabilize!

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

How Loooooooooooooooooow can you go?

Whoop whoop whoop....

The magic word for the day is "repo"

The magic man of the moment is "Tito Mboweni"

The magic phrase for the week is "How loooooooooooooow can you go"

Interest rates today dropped a whopping 1%.
Our current rate is 13%.

Lets keep it coming.

Interest Rates Might Drop But Banks Aren't Helping!

There's alot of speculation out there that the banks are now starting to give bonds again and are wanting to get back into the bond market. Well, fact of the matter is, if you're using a good bond originator, you should be getting your home loan approved anyway ;-).

So, does this mean we're going back to the good old days of 108% grants @ -2.5% below prime. NO!

In fact, what we're finding, is that although the banks are giving bonds, they're still in the business of making sure they're going to make money from you!

All this hype of interest rate drops!!! WOW I'm so excited! NOT!

Not only are the banks asking you to fork out your life savings to put down a 10% - 20% deposit on a property, they're increasing the interest rates that they're giving out to you! The home loan interest rates at the moment are ranging from between 2.5% ABOVE prime to 1.5% below prime.

So TITO, let me ask you! What's the point of dropping interest rates down 0.5% every 3 months if the banks are going to push their rates up every time you do this?

SOMETHINGS WRONG HERE MAN!

Readers - What are you thoughts????

Good news again - I'm looking forward to it!

Well, it seems as though the good news just keeps on coming. Lots of speculation about the interest rates dropping tomorrow by 100 basis points.

I know he originally asked for 200 basis points cut 2 weeks ago, so 100 basis points looks like it's happening for sure.

Nice relief for the home owners.

For those of you that didn't know, Woolworths dropped their food prices too on over 200 products making them a leader in the industry. Could this be a trend in the South African market...

Are the government and other institutions getting together to assist South Africans with their daily expenses.

Keep it coming South Africa! We need it and we'll love you for it!

February 2009 Interest Rate Drop!! woohoo

Ladies and gentleman... Some good news.




The interest rate has officially dropped 1%.

South Africa's new interest rate 14%.

Thanks Tito, you're a star!






Let the trend begin and let the houses start selling again!