Weak inflation gives ammunition for rate cut
http://www.busrep.co.za/index.php?from=rss_Business Report&fArticleId=5575677

Positive news on the inflation front has provided ammunition for those who believe the Reserve Bank should cut its repo rate from its present level of 6.5 percent. Statistics SA reported yesterday that consumer inflation came in at an annual 4.2 percent in June, down from 4.6 percent in May and better than the 4.5 percent median estimate of 21 economists polled by Bloomberg.

Ian Cruickshanks, the head of strategic research at Nedbank Capital, said that after the data was released the money market started betting on a 60 percent chance of another 50 basis point cut in the Reserve Bank’s repo rate. Expectations of another cut were reflected in forward rate agreements, contracts that run for three months starting some time in the future.

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Two UK banks eye Nedbank
http://www.fin24.com/Companies/Two-UK-banks-eye-Nedbank-20100726

Johannesburg – British banks’ plans to take over the South African banking group Nedbank are well advanced, if one is to believe the British media.

On Friday the possibility was again raised when the authoritative Financial Times of London reported that two British banking groups were negotiating with Old Mutual [JSE:OML] over its 52% stake in Nedbank Group [JSE:NED].

The paper’s columnist Mark Kleinman reported that HSBC and Standard Chartered had already negotiated such a deal with Old Mutual.

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Call for greater leniency in national credit act
http://www.iolproperty.co.za/roller/news/entry/call_for_greater_leniency_in

Another high profile personality in the Cape property sector has now said that until there is an easing of the National Credit Act criteria which the banks apply to their mortgage bond lending and a greater willingness to accept risk, there can be no hope of the property sector (or indeed the economy) once again flourishing.

Mark Marks, a director of the Western Cape Institute of Estate Agents and a consultant to Permanent Trust, says that right now both the residential and the commercial property sectors can offer good bargains to those buyers with cash. This, he said, reflects the difficult conditions being experienced – a large percentage of potential buyers are simply unable to get bonds and are forced to continue to be tenants, “which has never been the declared government policy”.

I don’t think the problem lies in the NCA as much as in the banks’ credit criteria. Because of bad debt the banks were very afraid of losing millions of rands again, and therefor their credit lending policies were adapted. 

They have become a little more lenient lately, but they are still very carefull with home loan approvals. 

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Interest rates unchanged after MPC meeting
http://www.realestateweb.co.za/realestateweb/view/realestateweb/en/page228?oid=62772&sn=Detail

After a two-day meeting, the South African Reserve Bank’s Monetary Policy Committee (MPC) left the key monetary policy interest rate – the repo rate – unchanged at 6,5%. As a result, banks’ lending rates to the public, i.e. prime and mortgage rates, are to remain at a level of 10%. Interest rates have been cut by a cumulative 550 basis points since December 2008.

Consumer price inflation is currently below 5% year-on-year (y/y), but factors such as double-digit administered price inflation and wide-spread wage hikes of well above inflation pose some risk to the inflation outlook. No further rate cuts are forecast for the rest of the year, with a rate hike expected by mid-2011 due to inflationary pressures. Mortgage repayments are still about 29% lower compared with late 2008, when the mortgage rate was at a level of 15,5%. However, the household sector remains heavily indebted, with the ratio of household debt to income at 78,4% in the first quarter of 2010, and expected to remain around the 78% level towards the end of the year. The debt ratio is forecast to rise marginally during 2011.

(via Instapaper)

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The mortgages rules for building yourself
http://www.iolproperty.co.za/roller/news/entry/the_mortgages_rules_for_building

“Building for oneself,” said Lawrence, “at the moment is almost always more expensive than buying a second hand home of the same size – but it has the huge benefit that the client gets exactly the home that he wants, designed and finished to meet his needs.”

Most of those going this independent route, said Lawrence, do rely on bank finance – and banks are still prepared to advance up to 80% bonds for this type of enterprise, provided that the loan applicant qualifies and goes about his request in the approved way.

This, he said, involves, either buying a plot , designing and building a house or buying into a so called ‘plot and plan’ system where the house is pre-designed as part of the development.

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