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Author Archives: Chris du Toit

Interest Rate now at 8,5%

Posted by Chris du Toit | Filed Under: Content - Published on July 20, 2012

The South African Reserve Bank (SARB) has cut the repo rate by 50 basis points to five percent. This means that the prime lending rate offered by the banks has also been lowered to 8,5%

This is good news for home buyers, since you will now qualify for a little more finance. Existing homeowners on a variable interest rate will also pay a little less each month.

For those home owners looking to save and who can afford the current installment, you may try to fix your installment so you do not pay the lower amount. This means a larger portion will be used to repay the principal amount and will save you thousands of rands on interest and greatly reduce your repayment term.

Crisis deepens at the beleaguered EAAB

Posted by Chris du Toit | Filed Under: Content - Published on July 16, 2012

It is a pity that a body which is supposed to regulate our real estate agents and ensure fair trade and practice could see itself in such a position.

From Moneyweb article: Crisis deepens at the beleaguered EAAB

The EAAB’s board called an extraordinary meeting on Thursday night to discuss the outcome of a draft audit report by external auditors citing, among others, irregular, fruitless and wasteful expenditure and non-compliance with sections of the Public Financial Management Act (PFMA).

…

Other expenditure mentioned in the report as “irregular, fruitless and wasteful” was R1.29m forfeited for paying a deposit on a building of which the contract was subsequently cancelled; the appointment of, and payment for, the services of a media company which was not in accordance with policy; fees for a forensic audit; and two amounts of R775 001 and R194 251 paid respectively in terms of CCMA agreements.

This organization was put in place to regulate the industry, but it seems it can hardly regulate itself.

Here is another concern I have:

Big players in the real estate industry have constantly bemoaned the state of affairs at the EAAB over the past year or so, but seem reluctant to speak out publicly for fear of reprisals.

So basically they fear the EAAB – how can one get matters to improve if concerns cannot be voiced publicly because of this fear? Someone needs to speak up, make themselves heard and hopefully there will be some improvements.

Rate cut won’t help economic activity much – Sacci

Posted by Chris du Toit | Filed Under: Content - Published on July 16, 2012

Rate cut won’t help economic activity much – Sacci

South African Chamber of Commerce and Industry (Sacci) CEO Neren Rau says while business and consumers would welcome an interest rate cut‚ it was unlikely to make a substantial difference to the economy at this stage.

Today the biggest problem when obtaining a home loan is an applicant’s credit history and payment profile. Sure, a 0,5% decrease in interest rate will have an effect on existing home owners with outstanding mortgages, but I also don’t see a lower interest rate resulting in more approved home loan applications.

For those who don’t know, the lower your interest rate, the higher the possible amount that you will qualify for. It is however also dangerous to count on the current low interest rate to purchase to your maximum affordability, because once the interest rates rise again you will still have to be able to repay your loan.

How to Sell, Buy and Move Home As Quickly As Possible

Posted by Chris du Toit | Filed Under: Home Loan Information, News - Published on July 11, 2012

Moving home is by no means a small decision, and it’s something that will of course be highly expensive and highly stressful. Normally this is something that goes on for a number of months while we look for a buyer, look for a home we want to buy, arrange everything, find a loan, move everything and generally experience lots of hiccups along the way. But sometimes we have to move fast, and when this is the case, is it even possible to move without too many challenges along the way?

Well if you’ve read the title of this article, then you’ll know that I’m going to argue that it is possible to at least speed up the process and to minimize trouble, even if it isn’t necessarily a ‘fast’ process still per say. Following are some tips to help make your move smoother and easier.

South African Property Market Healthier Than Expected

Posted by Chris du Toit | Filed Under: News - Published on May 29, 2012

Property owners in South Africa who still have outstanding debt on their property appear to be in a far better position than their counterparts in America. According to a recent report by Reuters more than 1 million homeowners in America who purchased their property in the past two years now owe more than the current market value of their property.

In contrast, according to an analysis carried out by Lighthouse, the greater majority of the 2,6 million South African homeowners with active mortgage bonds owe less than market value of their property.

This rose-coloured picture of South Africa’s property market is a stark contrast to the gloomy picture of overseas property markets. The figure of 1 million reported by Reuters translates into one in every 10 homeowners in America – a sign that this country’s property market is still feeling the pinch. A large number of these buyers who purchased their property after 2010 when they thought the market had hit the lowest point were caught unawares when the property market continued on its downward spiral in large areas of America.

The analysis made by Lighthouse was based on certain assumptions using all the data available from the Deeds Office since March 2009. The calculations made were based on the assumptions that the bonds were for a period of 20 years at a rate of prime less 0,5% and that the bonds were for 87,75% of the market value of the property.

According to the results of these calculations on a national level homeowners’ debt on their properties is 38.9% less than the market values of the properties, with Western Cape reflecting a 36,7% level and the highest equity being that of Gauteng at 44.3%.

The combination of the introduction of higher deposits and stricter qualifying criteria for mortgage bonds has contributed to this positive outcome. The financial risk for both homeowners and financial institutions is reduced substantially when a larger deposit is made on mortgage bonds.

The fact that interest rates have remained unchanged since November 2010 has resulted in a relatively larger portion of bond repayments going towards capital repayment as opposed to almost only interest, specially in cases where homeowners continued to repay the higher monthly payments that they were accustomed to paying when interest rates were at their peak.

Homeowners were given another period of grace when the Reserve Bank announced last week that the repo rate and prime rate would remain at 5.5% and 9%. Role players in the property market welcomed this decision as stable interest rates is the driving factor behind the recovery of the property market.