Bond applicants must accept tougher rates
http://www.iolproperty.co.za/roller/news/entry/bond_applicants_must_accept_tougher
Many “low-risk” bondholders who were given bonds at anything up to 2 percent below prime before the downturn have not yet realised that it is highly unlikely that they would now be treated the same way.
Rob Lawrence, national manager of Rawson Finance, says consumers forget that prime is just a yardstick that banks use to judge risk, and that the banks’ risk has increased commensurably. This means that the price of money, which is a bank’s trading commodity, has had to be increased.
“There has been ongoing publicity about the stricter lending criteria, but buyers who now apply for bonds and who are still earning well are understandably very frustrated when they find that their risk rating has been downgraded, and they can get either no discount or a very low discount, such as 0.5 percent on prime.
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