Can you believe it, the year is far advanced. And what a year it has been with probably the only gorilla in the national room being the arrest of our Minister of Finance. So far, everybody has confirmed it is not going to happen so let’s rest with that knowledge.

One of the reasons he would be hectic on government business is the soon-to-be rating by Standard & Poor which is due to make its decision on 3 June whether to downgrade SAInc to non-investment grade. The jury is out on what this could mean for us. For instance, PSG is buying Bonds because it believes the bond yield has discounted the likelihood of a down grade whilst RMB has surveyed it’s leading clients and decided the re-rating would not have a deleterious effect on the market. Moneyweb Today is reporting that the re-rating will have a dramatic effect on shares, quoting Standard Bank, and up to a 60% decline in value with a dragged bounce back over 12 months. Chris Hart, ex-Standard bank economist, is stating that under a particular set of circumstances, the Rand could collapse to R60:1US$. What a see-saw of opinions!

On the positive side, the SARB decision to hold rates was interesting. The view is that Inflation won’t stay out of the target band ie above 6%, for as long as expected. So they held the rate. Surprising to me as my sense is that that Rand will drop after the S&P re-rating and would have needed an interest rate hike to protect it. I still expect 2% this year and we are some 0.5% away from that point. You may recall that I called 2% against the general consensus of 1-1.5% for the year. Certainly I see the next 0.5% being inevitable. However, let me make it clear that I don’t believe the rate hikes are good for anything other than the protection and stability of the Rand. We simply cannot afford high interest and low growth but, if I was to choose between a devalued Rand and high inflation or raising interest rates, I would raise rates. Another point to remember is that S&P look for sound monetary policy and the independence of the SARB especially at these times – all of this is being demonstrated.

Assuming all the information above, where is property at?


  1. Prices continue to rise slowly but, surprisingly, real price rises around 0% are occurring. Why “surprisingly”? Well, we expected negative real growth in house prices and the figure is better than expected. Good News! What is interesting according to ABSA at end-April was that the affordable segment is performing well and pushing up the average. Their think is that down-buying [the tendency to buy a smaller house that you know you can afford] could be creating price resilience in the lower market. My sense is that government employees can afford these houses and are wanting to enter the property market.

  2. The rand is under strain whichever way you cut it. If that is so, building prices will rise and new houses will become more expensive that existing properties. That will push the price of houses in all sectors. By how much, I do not know but it is good news for ad valorem money earners like estate agents.
  3. The issue is affordability and this is driven by two things: Employment and Interest rates. Employment, whether it exists/remains and the stability around “my job” lends confidence. If rates are rising [and this must be a dead cert], I question my ability to afford a bond. The move earlier in May by the FED to hold back again on a rate increase in the USA coupled with our decision last week to hold fire is cause for positivity but we must accept rates will tend to rise – we’re in such a cycle. Rates rising has a mathematical impact on affordability but if I’m unsure about my job, I lack confidence to buy in any case. As a knock-on, that affects even my willingness to sell. The nutshell of this is that sales will be slow.

  4. The downgrade is possible and imminent. We really don’t have long to wait. I want to be with those who believe it will not occur; my heart is there. My head says it is inevitable. Unless PSG is spot-on, it will raise the cost of borrowing for government, decrease the value of shares and dent the Rand. None of this we need at a time of slow growth and drought. It will make us feel poorer before the markets rally back over a year. Let’s raise our genes of faith and trust for the best outcome for all our Peoples.

My best advice – Know what you can control and work hard at it. Rest with what you can’t control and allow things to take their course. If you really do have money to buy offshore hard currency then do so.


Yours in Property

Jack Trevena

What is a Bond Originator?

A bond originator can prevent nightmares when buying your dream home.  We have the tools to secure the best financing terms possible for you and the answers to all of your questions. Throughout South Africa, our Homeloan Junction consultants know their way around the business of home buying. Simplify the multifaceted process of home buying with a single contact to deal with the whole lending process.

What can a bond originator do for me?

When you consider the many benefits of a bond originator, you will be glad to have one working on your behalf.  Your estate agent works on your behalf to find and negotiate a purchase contract for your new home; we at Homeloan Junction can take care of finding the finance … and much more!

Homeloan Junction offers services to you both before you find your new home and after signing an agreement to purchase. Before you even begin shopping for your new home, use the calculators on our website. They make it easy to calculate how much house you can afford and what your monthly payment will be. You can then direct your estate agent to show homes to you that are within your price range. Prequalifying yourself avoids wasted time and disappointment.

9 Good reasons to choose a bond originator?

Are you ready to apply for home financing? The benefits of using a bond originator are many.

  • At Homeloan Junction, our advice is free. You pay nothing for our expertise
  • Your bond originator will walk you through the application.
  • Homeloan Junction has built up a relationship with the banks. Your bond originator  will know who has the best deals at any given time.
  • Your bond originator will submit your application to nine different banks,  one of which will have your best deal.
  • Your bond originator will negotiate with the banks on your behalf to secure the best interest rate possible.
  • Your bond originator does all the paperwork for you and explains the benefits of each offer.
  • You could prepare and submit an application to multiple banks yourself. However, an experienced bond originator will likely find you a better deal than you can negotiate yourself.  It will also save you time and aggravation. Remember, this is a free service.
  • Homeloan Junction has an impressive approval rate for home loans.
  • Your bond originator will work with your estate agent to make sure all agreed to terms are met in a timely manner.

Do you need these home loan services?

Bridging Loans: This short-term loan bridges a time gap. Your contract to buy calls for funds on a specific date. Your funds may not be available until 90 days after that date. What do you do?
Bridging Loans will prevent a delay, allowing you to uphold the terms of the contract. Bridging loans are the solution for those buyers unable to coordinate the purchase of a new home with the sale of their old one.

Home Improvement Loans: Home improvement loans are secondary home loans. Use one to remodel a kitchen, add a pool or an extra bathroom. They are also a lifesaver when homeowners need expensive emergency repairs. The payments are usually small and extended for several years.

Personal Loans: Personal loans are smaller than major home improvement loans. You can secure these flexible loans quickly and often over the telephone. This kind of loan will allow for quick completion of your new home décor. Maybe you need a new bedroom set complete with a memory foam mattress. Sometimes furniture and curtains from the old house do not work in a new one. The payoff term of a personal loan will be between 15 and 60 months but you can always pay it off early.

Investment Property Loans: Buy a house to let as an investment for your future. American billionaire Warren Buffet recommends investing other people’s money to gain the greatest return. You borrow the money to buy an investment property and the lessee pays back the loan in rent to you.

In twenty years, you have a valuable asset free and clear. You can sell the investment property or borrow against it. Use the funds to pay for university educations, weddings or early retirement.

Homeloan Junction is your point of contact for complete home loan services. Our experienced bond originator are sure to find the best rates and terms to fit your financial needs.

Work out if you can Afford your Dream Home

Calculate how much you can afford to spend on your new home with a bond repayment calculator. We have one on our website at Home Loan Junction that will give you the numbers you need to know before you shop for your dream home.

Your estate agent will be able to help you more effectively because you already have an idea of what price range you can (realistically) afford.  It makes little sense to look at homes you cannot afford to buy – that is just a waste of time for everyone, and can leave you heartbroken.

When you have found your new home, Home Loan Junction will help you find the best deal possible for your bond. As a leading South African bond originator, we work with multiple banks to tailor your home loan to your needs and wants.

How Much Can You Afford to Pay Monthly?

Follow these 6 easy steps to establish how much you can pay on your next home:

  1. The first step is to calculate the combined gross monthly income of everyone who will be an owner of the home. Using our handy affordability calculator. For instance, if a married couple is buying the home, and both are employed, then use both incomes.
  2. Your gross income is the combined amount both of you earn each month before any deductions. That amount goes in the gross monthly income box on the bond repayment calculator.
  3. The next box on the calculator is for net income. Combine all incomes after deductions. That is your combined net income.
  4. The bond repayment calculator asks you for your total monthly expenses. Include the total of your monthly payments for credit cards, car payments, store card loans, and anybody else to whom you owe money. Do not include your current housing payment, utilities or homeowners insurance. Total it all up and put that number in the box for total expenses.
  5. Now subtract your monthly expenses from your net income. That is your net surplus income. In other words that is how much money you have available for housing, utilities, food, and other necessary living expenses.
  6. Plug-in the number of years you want to repay the bond and the interest rate. The calculator will figure the monthly repayment amount you can afford and the maximum price range of homes you can afford to buy.

What Will You Pay?

If all goes according to plan, your estate agent will do a superb job of understanding exactly the amenities you want in a home. The house showed to you is your dream home and it falls within your price range.  Now what?

Once you reach a price agreement with the seller, five factors will decide your monthly payment and the total amount you will pay for your home. Use the bond repayment calculator to explore how much you will pay each month:

  1. Down Payment: Use the bond repayment calculator to see how much your payment will be if you make a larger down payment. Of course, the more down payment the smaller the monthly payment. However, maybe you would like to hold out some money so you can pay cash for landscaping or furniture. The decision is pure personal preference.
  2. Interest Rate. Change the interest rate and you change the payments. The better your credit and the bigger your down payment, the lower your interest rate is likely to be. Change the interest rate in the calculator and see how the payment changes. The amortisation calculator will show the amount of each payment that goes to reducing your loan and to interest.
  3. Bond Repayment Term: Spread your payments over 20 years and they will be larger. Spread them over 30 years and the monthly payments will be smaller.  Again, it is personal preference. However, you will pay far less for the home if you pay it off quickly because you will be paying less interest.
  4. Your Credit Rating: The better your credit rating the more flexibility you have in the other three factors.
  5. Your Lender: Homeloan Junction is familiar with South African lending practices. We know how to capitalise on the benefits offered by each bank. We match you with the best possible home financing terms available. The buyer does not have to run around trying to find the best terms.

Homeloan Junction focuses on one type of financing and that is home loans.  With our handy bond repayment calculator, you can know how much house you can afford, the monthly payment, and how long it will take to pay. Home buying will be less traumatic because you are now an informed shopper with a team of experts on your side. We suggest using our multi-faceted bond repayment calculator before you even start looking for a home.


There has been some amazing news of late. Sadly, we have become so accustomed to bad news that it washes over us in a kind of ostrich way. We duck and just hope the wind comes head-on so we don’t get swept of our feet.

So the good news!

RMB is about to build a property portfolio somewhat equal to its own portfolio of R82bn. What a vote of confidence in South Africa Incorporated [SAInc]and such good news for us all. When questioned as to the future of SAInc, the CEO, Herman Bosman said: We are South Africa optimists. Between the two companies we have around R150 billion invested in financial services in South Africa.” Quoting Moneyweb, Rand Merchant Bank Holdings (RMH) hopes its newly launched property business will eventually play a “meaningful role” next to FirstRand.

Like Redefine, RMB will not restrict itself to SAInc but will also be investing overseas. For instance, Redefine have done a mega-deal in Poland for 75% of real estate company, Echo Prime Properties, in March for R8 billion to boost its offshore exposure and will be reducing this exposure to approximately 50% in the future. Again quoted in Moneyweb, CEO, Andrew Konig says: “Poland offers us GDP growth that is more than what SA offers. And we believe we have invested in an environment where the tax rules are efficient”.

And thirdly [Wow, lots of Good News today], Moody has placed us on “negative watch”. If you ever wondered what Pravin Gordhan is doing in his day, be grateful that he and his Treasury team, with the support of business and government,  have convinced Moody Rating Agency to not downgrade Us a whole notch but rather to only move their watch-status from Stable to Negative. Negative, in this sense, is not negative but rather a wait-and-see to give us more time to implement elements of the National Development Plan and show the world that we can; not that we can’t. That we can settle down politically, that we can respect Chapter 9 institutions, that we can run a free and fair municipal election, that we can turn the tide of downward growth, that we can increase our employment, that we can reduce the cost of government, that we can continue to pay our debt, that we can keep the lights on and that we can feed our people despite the headwind of a debilitating drought. Indeed that we can continue to be the leading Constitutional democracy on the continent of Africa.

b2ap3_thumbnail_image004.pngEquity Market Response to Downgrade    b2ap3_thumbnail_image003.pngCurrency Response to Downgrade

b2ap3_thumbnail_image002.pngBond Market Response to Move to High Yield   b2ap3_thumbnail_image005.pngSA Repo Rate vs 5y Moving Average

So the bad news!

Watching President Zuma deliver his Presidency budget vote to a half-packed House of Parliament made me want to change the name to Par-Lament. What a sorry sight and what a sorry State of Affairs. It was the first time for a long time that President Zuma was able to finish a speech without interjection and walkouts. But all of the parliamentary privilege of challenge and questioning was missing from what should have been a debate not an address.  We do not intend to discuss the efficacy or otherwise of such abstinence of the Opposition parties. In fact, what I’m about to say in the rest of this blog, avoids many issues whilst it hopefully challenges us All personally to play our constructive part in SAInc.

Outside of the House, Mathew Theunissen added his sentiments to the race row that pervades our land. Other such incidents in the News went on the backburner for the week as Mathew apologized repeatedly for his late night misdemeanor. Tragic isn’t it that as millions of rands are corrupted and millions of people live in poverty in SAInc, we can be seized by race rows? Whilst they highlight the underlying inequity in our society, hopefully they also bring each one of us before the mirror to question our own ethics and stances to one another in the human race. One look at racism on Google and you are struck by how ubiquitous the problem is and how many countries are plagued by its scourge; but that is no excuse for SAInc.

These opening points bring me to the place where my heart is this Sunday morning.

We have the ability to read the negative and be part of its onslaught or read it, with introspection and wisdom together with the positive, and live like there is only upside. I’m going to write it again so you can read it again and THINK: “We have the ability to read the negative and be part of its onslaught or read it, with introspection and wisdom together with the positive, and live like there is only upside.”

An old preacher of mine used to say: “You cannot preach the measles if you’ve got the mumps”. Truth is, the house buyers of the future will be people of all colours and I can guarantee you that we have many areas in our country where 60-100% of the buyers are already people of every colour. Estate agents and professionals have already embraced the future of the Equity of People and their hard-earned Rands and are doing good business across all colours of people. Those with stereotypes entrenched over many years, have had them cracked and loosened and, finally done away with, by lovely people of all races, across all socioeconomic levels who only want the common good – a sound roof over their family’s head, a school for their children, and safety and employment for themselves and their immediate family. What could be less racist and more human for each of us to enjoy, than to recognize that this beautiful country of ours has place for Everybody in it? Will we meet horrible people? – of course! But they too will have their day as their pride is overtaken by the humility of good men and women of all races, religions and creeds who seek the beauty of this beloved country that shines through in the faces of all Her People.

So it is that I make an appeal to all of my readers. Get up tomorrow and look in the mirror. Acknowledge that we all have Rights and Responsibilities. We all have Influence for Good or for Bad. There are not Special People only Common People with Common Good in their Hearts and Souls. People who hold You in their Esteem as You hold Them in Yours. People who deserve a home and a bond and the confidence in the Future of SAInc to be able to afford it in the years to come. Acknowledge that there will be some horrible people amongst them but chose to judge them slowly for you may not have walked in their shoes – you may never know the journey that they have travailed to arrive at the door of your business. Accept them, Because they are Different. Do business with them because you Want to Help them Do and Be Better. Treat them with Dignity and with Respect – yours is not the need or right to change them but the privilege to help them with the biggest purchase they may have made to date in their lives. Take a bet with yourself that they will turn and smile before your dealings with them are over.

In essence, look at the Good and the Bad through the eyes of Patience and Kindness. Withhold Judgement until you have taken the time to be Mindful – Present in an Open and Accepting way. There is nothing like Powerful Interpersonal Skills at a time like this in our nation. We stand on the brink of Rating downgrades but we will not re-rate ourselves as People of South Africa Incorporated. No force on earth, political, social, economic, or global, should be allowed to detract from us being Men and Women of Truth and Confidence and Reconciliation in our spheres of Influence and Persuasion.

I commit myself to this Way of Being. Homeloan Junction commits itself to treating all People with Dignity and Respect. Our great property industry, full of men and women of Good Repute, would demand nothing less of us as members of it and citizens of SAInc.

Yours in Property

Jack Trevena