A very interesting week last week. Two interest rate reviews, one up and the other, sideways.

But before we think about the effect of this on our home and homeloan businesses, here’s a quote from Ayn Rand to encourage you:

“In the name of the best within you, do not sacrifice this world to those who are its worst. In the name of the values that keep you alive, do not let your vision of man be distorted by the ugly, the cowardly, the mindless in those who have never achieved his title. Do not lose your knowledge that man’s proper estate is an upright posture, an intransigent mind and a step that travels unlimited roads. Do not let your fire go out, spark by irreplaceable spark, in the hopeless swamps of the approximate, the not-quite, the not-yet, the not-at-all. Do not let the hero in your soul perish, in lonely frustration for the life you deserved, but have never been able to reach. Check your road and the nature of your battle. The world you desired can be won, it exists, it is real, it is possible, it’s yours.”
– Ayn Rand

On 28 January, the Monetary Policy Committee of The South African Reserve Bank [SARB] announced an increase of 0.50% in the Repo rate, which will result in the Banks’ Prime lending rate increasing to 10.25% with effect from 29 January 2016. This was the first interest rate review mentioned above.

A few comments:

  • I heard a leading economist interviewed this week and he would not be drawn into quantum of the interest rate hike in 2016, whether 1 or 2%, but he did make the point that it would be well considered and managed.

  • I did stick my neck out in the last blog and say 2 % this year as I feel the Rand and inflation will have the final say on how much.
  • As regards the Rand, it was wonderful to see it pull back; from the mid-R16 range, to about R16.26 to close around R16.18 on Friday. So the market was factoring in a significant rate hike on Thursday and got it.
  • We are between a rock and a hard place with the interest rate. From a growth perspective, we cannot afford rising rates. Both indebted business [Employment] and consumers [Affordability] will find the going tough. Harming either constituency will harm the country. Sadly, though, with the Rand slide by about R3 from R14 to R16 (and as high as R17) to the US$, Inflation will rise. The 6 tons of Maize being imported does nothing to improve the situation. Last year, Inflation averaged 4.6% and in 2016, is expected to average 6.8%. The SARB target range is 3-6%.
  • Remember, absolute versus relative maths. “Only 2.2%” does not seem like much Inflation, but it is 48% [2.2/4.6*100] more Inflation than in 2015. In turn, the 0.5% rise in rates is not “just half a percent”, but forms part of a 1.75% rate rise off the lowest base, 8.5% on 20 July 2012,  since 15 November 1973 [See the Chart attached] when it was 8%. Therefore in relative terms, the cost of interest has risen since July 2012 by 21% in three and a half years. That’s a lot more interest being paid.
  • The process is being well managed and is simply unavoidable. The SARB has done the responsible thing and protected the Rand exchange rate which has been in a mess even before El Nene given Emerging Markets battling a very strong US$. By the way, a stable exchange rate to all major currencies is one of the core functions that a Reserve/Central Bank executes. In addition, if our Finance Minister has any chance of staving off a Non-investment grade rating by the Rating Agencies, he is going to need a strong, independent SARB doing what is right for Inflation. Also, by the way, his fight with SARS is also very important as they need to collect the revenues in order to keep Government stable. In the absence of efficiency in SARS, taxes will go up much more in February.

So, to sum it up, the rate rise was good for SA Inc, Inflation and the Rand/$ exchange but bad for Debt users. Overall, probably unavoidable after December 2015. I sincerely hope my 2% rise (1.5% remaining) proves very wrong for us. Watch the Rand, Inflation, the Drought and Oil.

With less detail, the US FED decision to retain the US interest rate where it is was is also them saying they do not want to dampen the US economy. That is really good news as:

  • The stock markets accepted that as meaning the US economy remains strong enough for about 2% growth in GDP. Hence the global markets rallied somewhat.
  • That fact makes up for China and provides them some headroom to work through their issues.

So, overall, a good week for rates in a fragile environment.

So what about us, you ask?

FNB put the house price rise for 2015 at an average of approximately 6.4%. that would give a real price rise of almost 2% after Inflation. ABSA, in their January 2016 synopsis expects an approximate 5% rise in 2016 and this will result, as we can expect from the rise in Inflation, in approximately -1.8% decline in real house prices this year. They quote a number of factors but the one that would concern me the most is weak Consumer Confidence. But please remember, the reversal in the real house price growth rate is because of the large increase in inflation and not necessarily because less homes are being sold.

That means that house prices will continue to rise so the question then is:

–        What volume will be sold?

–        How much of that will I, as the estate agent/principal, sell?

My sense is that less houses will be sold this year and the affordable homes will continue to dominate sales. My reasoning is simply that affordability will be affected by higher interest rates and Inflation will eat away little by little at our disposable income. I expect some tax increases but I’m not sure if the Finance Minister will target the rich or make them across the board. I don’t think VAT will rise as it is just too sensitive – we’ll see.

The last question remains yours to answer. When all the pundits have had their say and I have written mine, you must decide if you are going to list less, show less and sell less. That answer remains with you and your energy and enthusiasm. Believe all you read and internalise it, and anyone could predict your outcome – sales will slide.

Read it, think it through and find the way around obstacles with optimism and determination, not letting  the hero in your soul perish, and you will enjoy success. Check your road and the nature of your battle. The world you desire can be won.

Homeloan Junction has made that decision and will be there to support you in yours.

Yours in Property.



My apologies for this blog so late in January 2016. To be honest, I have been thrown by the state of the market and the global economy. Little positive has come out of all the news and the negativity has taken on Grim Reaper proportions. Every article seems to be focussed on the negative and bad news aplenty has been there to write about. El Nino and El Nene, the collapse of the oil price, the pressure test of the Oil industry and oil-producing countries, threats of social unrest as the drought intensifies and the oil-based economies suffer, Donald Trump and Hiliary, and the Rand on its way to R20/$. Each and all contributed to a flood of depressing information.

But that said, some sanguine voices have arisen and a semblance of encouraging, well-backed information has begun to emerge. So let’s have a look at a few of the pillars that underpin some good news and find our way into February and beyond. Cliché or not, Henry Ford sounds clear: If you think you can or you think you can’t, you’re right.

Low Oil Prices: I often think Thank Goodness for the lowest oil prices in a decade. For the consumer of oil, that has been a saving grace. Imagine having to buy Oil at R16.50 per Dollar? I guess the price at the pump would be R14+. Macroeconomically, the oil price also contributes positively to Inflation which, as we see later, must be on the rise.

The problem that is being referred to by many writers, however, is the impact of low oil prices on the oil-producing countries. Of the BRICS countries with whom we have close co-operation, Russia and Brazil both have significant economies built on oil. Then there are the Asian countries like Saudi Arabia and closer to home, Nigeria and Angola. If a country endures dramatic, sustained drops in the price of its richest export, what happens to its people? Of course, the worst is feared especially at levels below $30. Today (25 January) it is up to $32.18 from last week’s sub-$30 prices. That could prove to be good news even for own Sasol.

USA interest rates rise: The USA interest rate rise signals the FED’s satisfaction with the US economy. 2% GDP growth is not fantastic but coupled with a 5% Unemployment rate, is cause for a small move. This is the first rate rise in 8 years and sent the currency markets into a flurry. Thanks to our Reserve Bank, we had already begun the process of raising interest rates. This did help cushion the decline of the Rand. The FED has signalled more increases but I suspect these will be 6 monthly and of the order of 0.1 to 0.15% – right now nobody wants to allow the US economy to stumble.

Inflation: The world has experienced extremely low inflation as the interest rates and China have functioned in tandem. Inexpensive production out of China to global markets and very low interest rates have kept Inflation at lows for record periods. But, post the sub-Prime crisis, the printing of money became commonplace and it was just a matter of time before inflationary pressures would reappear. Rather than focus on the rest of the world, South Africa will be hard hit by this issue. A weak Rand, set to weaken much further, and the drought with its Maize imports will hit Inflation hard. A particular make of 4X4 has risen from R713000 in 2012, to R890000 in 2015 to R980000 in 2016. That’s 13.5% per annum or twice the upper range of the SARB’s target. Far more relevant is the current requirement of Maize to be imported at a cost of R20bn; once we’ve paid for it, our producers need to make a profit on sale. The Poor amongst us will bear the brunt of the drought.

My sense is that our Inflation will rise significantly this and next year and exceed the target range of 3-6% even this year.

Interest Rates: In all of this, our interest rate was generally projected to rise by 1.5% from about mid-2015 to end-2016. My sense is that we could see a rise of another 2% this year in order to protect the Rand/$ exchange rate and in an attempt to curtail Inflation. This will result in a  corresponding rise in mortgage rates.

What is really positive is that Pravin Gordhan said last week at a Press conference that he would do everything in his power to prevent the Rating Agencies re-rating South Africa to non-investment grade (Junk bond) status. By the way, Brazil and Russia are already there and Saudi Arabia is, like us, on the brink so we are not the only ones in this pickle. The question will be if he has the resources in the budget to do so and a tax hike seems to be on the cards as part of his attempt. Sadly, a downwards rating will weaken the Rand and increase Inflation and interest rates.

China at 6+%: The way many people have been writing, you would think China is in recession. This is not true and that country is currently growing at about 6.8% per annum. Their stock market seems to warn of an underlying crisis but it has 50 million [you read right: Fifty million] personal investors and their layman’s view could be “run to avoid the stampede”. Assuming this is not the problem, the Chinese stock exchange should settle at a new, albeit, lower equilibrium, and stop spooking the other world markets.

Goldman Sachs report: Prime Minister Modi in India is credited with the revival in that country. India is growing at 7.2%  and has introduced business friendly policies that have brought about a marked improvement in growth and employment. China’s 6.8% is then ahead of Indonesia at 4.5% and Turkey at 3%. Overall, Goldman’s report puts 2016 global growth at 3.5% (2015: 3,2%), confirming the World bank view of 2016 growth between 3 and 4%.

It would seem therefore that many economies are progressing well even though stock markets worldwide have found themselves in a fear-and-greed state. The consequence of this is volatility and we will need to get used to it for the next quarter or two assuming the oil price retains some stability above $30 and China settles down enough for a recovery in commodity prices. Hold thumbs!

So, as we read about this mixed up world economy, there lies a decision for each of us – Rise or Fall. I understand that it’s “talking psychology” again but I think Henry Ford had a point. Why is it that some businesses will do well despite the headwind and others will crumple into a heap? Surely attitude, determination, a go-through spirit and sound leadership has a massive role to play. Look how India – complex beyond compare – can be turned around by a man and his vision translated into action by his government. Compare that to what we endure despite our blessed resources, sound financial system, great infrastructure and people; really, there is no excuse. On the other hand, we are not immune nor an exception – Australia is suffering the commodity price slump, Europe is struggling to come out of its economic woes, the whole of Southern Africa is in the grip of drought, and the USA and the UK are two of the most indebted countries on earth. But, instead of bemoaning our dear country, stand up and be the difference you want to and need to see.

Homeloan Junction will commit to putting its best foot forward. In doing so, thank you, in anticipation, for the support we will receive from you in 2016.

Yours in Property,


South Africa can be very proud of its property industry

I was having a look at the ‘net and came across this headline: SA property sector worth R4.9-trillion

I know, I felt like that as well: So much property and so little in my name. It happens to all of us!

But, that got me thinking about our country and the industry…………

The South African property industry is significant in many respects:

  • Property rights are secured in our Constitution and we trust that it will stay that way.
  • The Deeds Office nationally is functional and does relatively well in securing our property rights as well as the rights of our financiers.
  • Our property law is well established and we produce outstanding conveyancers and property experts in many fields of the property market.
  • It is very well managed with a number of globally competitive property funds that own significant amounts of property on behalf of shareholders.
  • Our estate agents are highly skilled and requiring of continuous training and development in order to stay at the top of their game. Estate Agencies, are widespread and whilst the large franchises dominate, there is still room for the smaller business owners to ply their trade off the back of excellent exposure and/or relationships in their community.
  • We are building property across the spectrum of requirements, from the poor to the aged and up to the rich. Whilst the process could be much better, developers are getting access to land, and we hope ever-improving, to electricity which was a real issue a few years ago.
  • In our cities we have leafy suburbs and our own “Hollywoods” and, by and large, we live safely though behind some very high, secured walls.


Not a bad situation to be in as a country. Yes it could be better, our cities could be better managed in key areas of delivery, our poor ramshackle areas could be revitalised and our informal settlements are a blight on us, but it is probably fair to say that we have a good property industry overall. In fact, I would be prepared to call it a significant and contributing national asset.

The CEO of the Property Sector Charter Council, Portia Tau-Sekati, presented excellent research to the industry in September. The sector contributes significantly to the country’s economy and in 2009 comprised 8.3% of gross domestic product (GDP), according to a South African Property Owners Association research report entitled “The economic impact of the property sector in South Africa”.

According to the Charter Council’s study, only 1% of the country’s land is urban and residential, about 73% is natural pasture, approximately 12% is agricultural and the remaining land is comprised of conservations and reserves. Two-thirds of the property owned in South Africa is residential and worth R3-trillion, while commercial property is worth R780-billion. Undeveloped land that is zoned for development is valued at R520-billion and publicly owned property, including national, provincial and local government and state-owned enterprises, is worth R570-billion.

“Retail property has the highest value of the commercial property sectors in South Africa at R340-billion, followed by office properties at R228-billion and industrial properties at R187-billion,” the Charter Council reported. “Representing a small comparative value of R25-billion is hospitality, leisure and ‘other’ property.”

According to SAinfo reporter, the study will be an annual one and the Charter Council aims for it to become the benchmark against which progress in the industry is measured. “The study is a useful tool for understanding the South African property market and its dynamics,” Tau- Sekati said.

To read more go here.

I make my point again against the backdrop of this recent and defining research that South Africa can be very proud of its property industry.

Against this backdrop, the SARB’s decision to hold off on an interest rate hike late last month augers well for the industry. Inflation figures will be announced today [19 October 2015] but are expected to remain within the 3-6% range so no serious danger there. Of course, the whole world seems to be waiting for the USA rates decision and we have the unfortunate matter of the weak Rand, ostensibly because of the US$ strength. There is no doubt that the SARB decision, as much as it would like to raise interest to protect the Rand and still inflationary fears, is set against the context of South Africa’s dismal economic growth. That will probably be revised to a 1.5% forecast but it is, at best, hovering unacceptably low.

John Loos, FNB’s Property Economist, speaks to the interest rate and makes valid points as usual. Firstly, a gradual rise in interest rates prevents any need to over-react later and keeps lenders and borrowers cautious. Secondly, he makes the point that lending does not grow the economy but only productive lending does that with any sustainable effect. Finally, he states the obvious that we all need to hear: Indebtedness is not good for our economy [and back pockets] and we should use the low interest rates as an opportunity to reduce our household debts as quickly as possible.

According to Private Property, Cape Town has the most exclusive properties and precincts of incredible value. Private Property, quoting Lightstone research, reports, “Cape Town may not be the financial epicentre of South Africa but it continues to dominate the list of most exclusive addresses and data has revealed that the Mother City lays claim to three of the five most elite addresses in the country. According to the Lightstone research, the most expensive street in South Africa currently is Nettleton Road in Clifton, where the median price for houses is R27.1 million, followed by Glen Beach Road in Camps Bay with an average house price of just under R24m. Head Road in Fresnaye takes fourth place with an average selling price of R21.44m. Sandhurst in Johannesburg scoops third and fifth places with a median sale price of just under R25m in Coronation Road and R20.76m in Rivonia Road. In the list of most expensive addresses in the Western Cape, not surprisingly, four of the five most pricey are situated on the sought-after Atlantic Seaboard, with fourth place taken by Eastcliff in Hermanus.

Lew Geffen says: “The upswing on the Atlantic Seaboard started in 2002 when a property in Chilworth Road in Camps Bay sold for R23m, but the demand for luxury homes really began to peak 2008 when 13 properties in the R20m plus price band changed hands to the combined value of R414.193m.”  “In spite of the credit crunch which hit in 2008, property values on the Atlantic Seaboard have continued to grow exponentially and now it is not only home to the most trophy properties in South Africa; it also fetches the highest price per square metre.”

Closing on this article, Cape Town may be home to the most luxury properties in South Africa, although data from New World Wealth shows that Johannesburg still has the most Dollar millionaires in the country.

So there you have it, Cape Town has the properties and Johannesburg has the money. Like Homeloan Junction’s excellent service, some things never change.

Yours in Property

Inside Tips on getting your homeloan approved first time

Let’s face it, particularly in the South African context; securing a homeloan in order to purchase your first home can be quite scary. Do you even qualify? Most men and women dream of settling down and starting their own family and to have their very own home in which to do this. The bad news is that the challenges of meeting the criteria as a first-time and successful applicant have increased. Does this mean you won’t qualify?

Here are 5 insider tips to help you to secure the homeloan that will help you buy your dream home:

Tip #1 Create a Record of Good Standing
Many first-time applicants have had their home loan application rejected. Why? The problem lies in the fact that young applicants have no credit record and history of their ability to pay promptly and consistently. So, in spite of having saved for a deposit with the bank, you may not be able to secure that homeloan simply because you have no other loans. Before making an application, spend some months creating a good credit history by paying smaller loans on time, like your cell phone or clothing accounts.

Tip #2 Generate Financial Discipline
While the country’s leading lending institutions and major estate agents warned against this, the government under Thabo Mbeki was determined to and ultimately succeeded in relaxing credit access rules and lending criteria. There are two ironies in this. One; Mbeki’s Minister of Finance (who did not have jurisdiction over these rulings) was openly opposed to the relaxing of previously prudent credit rules. Two; while the banks were initially sceptical when the laws were quickly passed, they obligingly processed new applications and granted them. This proved to be a disaster waiting to happen. The trick is to have financial discipline – don’t accept just any offer of credit. Make sure that you can afford the repayments first. This way you won’t be in any danger of being blacklisted.

Tip #3 Make Formal Inquiries with Home Loan Junction
Today, the homeloan application process is relatively simple and straightforward, and most South Africans with access to computers, laptops, mobile devices and the internet, can self-test while completing a pre-application. Correctly, banking criteria still prefer the first-time applicant (or any applicant for that matter) to make a formal application and ideally with one of our officials in person (although the application can, in certain instances, be made online). Invariably applicants are reminded of, or advised on what records and documentation are required to make inroads towards a successful application.

Tip #4 Ask About Options and Opportunities
In reaction to the disastrous effects of the relaxation of credit lending criteria, the government initiated new legislation which saw the founding of the National Credit Regulator which essentially acts as a watchdog for both clients and lenders. This has also made the homeloan application process more difficult for many applicants. But, today there are still companies, particularly new entrants to the personal and home lending markets, arguing in favour of more flexible, merit-based and opportunistic rules. Their argument is sound because if more people have access to credit within the parameters of properly regulated checks and balances, of course, the country benefits economically as a whole.

Tip #5 See What You Can Afford
Let it be known that all is not lost for new applicants. Homeloan Junction leaves them with some clues on how to go about securing their homeloan successfully. As a bond originator and not a traditional lender, We promises a speedy delivery of services ideal for helping you plan ahead of time. The emphasis is also on savings and tools which are available online to help you assess affordability and whether you qualify for a first-time loan. We also offer innovative alternatives to traditional bonds which could see you paying far less in the long term and also paying off your loan over a shorter period of time.

Tip #6 And Learn How Much You Can Save
For more information on whether you meet all criteria and what you can do next, you can contact Homeloan Junction directly online. Our service and advice is free.  Blog posts on our website have important information on what influences first-time home buyers.

In view of all the challenges, expectant applicants should have realistic objectives. With enough information on the home buying process, and with online calculators at their fingertips, there is no reason why South Africans cannot plan and succeed in buying their home at their first attempt.

Part of our service entails good advice based on experience and qualifications. Talk to Homeloan Junction today about how you can successfully secure your loan. We have contact with banks and conveyancers and knowledge of the products, and various credit terms available to advise you of all the options which will best serve your requirements.

How better to serve your needs than to approach a company who will, on your behalf, motivate and negotiate one of the most important deals of your life? Homeloan Junction is a one-stop service complete with efficiency and convenience at the tips of your fingers.

Yours in Property


individual or firm; they are not more important or less important. A friend of mine consults to a coffee company. They have the opportunity of cracking the Retailer market [high turnover, low margin] or of rolling out a franchise of brilliantly branded coffee cafes. The first strategy looks powerful on paper, but the second, by far less in turnover, makes more money. Interesting for the entrepreneur because he physically can’t do both. He is faced with goal prioritisation and then goal optimisation as he executes. Poor goal clarification can lead to a “straddled” strategy –  attempt to do everything and, whilst I may not fail at everything, I don’t optimise outcomes as I could have if I was focussed. In the book by Ashbury and Ball, The Winning Ways, they quoted Meyer Kahn, then-CEO of SAB, as saying he just did one thing every year. Sound seriously simplistic, almost childish. But you see his goal in those days was to internationalise SAB and become the biggest brewery in the world. His business managed 2nd and anyone who has SAB shares knows what’s happening right now as Anhauser Busch moves to acquire SAB, gain and African footprint, and be by far, the #1 brewer in the world. So your goal needs to be owned and communicated as the most important thing you need to achieve. If not, beware the new year resolution quandary.

  1. Bringing the resources to bear

In the course of establishing milestones or, in other words, laying out the journey of the Plan, you would have given thought to what it takes to achieve the goals. Apart from the caveat that entrepreneurs often take big risks, knowing what it requires to take on your goals is fundamental to Execution. Early January, you will begin committing resource to your Vision and its Plan. In the coffee example above, the owner needs to employ a Financial Manager without whom his tax, debtors and quick expansion could vaporise his business. A friend of mine taught me that businesses fail for two reasons: Success and Failure itself. Whatever the latter is you will understand, but the former is harder to comprehend. Success, and what the bankers call Overtrading, goes hand in hand. You may need new staff, more staff, new offices, more offices, more cash resources, more marketing, more stock – whatever is “more” could lead to unsuccessful Execution. From observation, Success fails even more conspicuously than Failure or, put another way, it’s just a bigger mess. So dedicate the resources that you have to the top priority goals and don’t overstretch them. Getting “one thing” done properly is more important as you build success than attempting everything. The only antidote to inadequate resources is clear prioritisation.

And, by the way, for many estate agencies, the most vulnerable resource is the Principal – You. Stretched too thin, you cannot execute optimally. You may put in the effort but something is bound to fail – your health or relationships, for example. You’re human so pace your ability to Execute as if it is a scarce  resource. By doing so, you may avoid much disappointment.

  1. Management control

I often think that this management discipline is the most neglected of all. In 1916, Henri Fayol laid down 5 functions of Management which were condensed over the years to four: Planning Organising, Leading and Controlling. Let’s face it, by the time you’ve done the first three successfully, the fourth seems redundant. Nothing could be further from the truth and, I would go so far as to say, what you don’t Control will control you. The five pillars of Management Control are: Set the Goal, Measure Performance, Evaluate Performance, Correct or Reward and Feedback [into Goal Setting]. A process is required to control an outcome. Space allows for just a few points: (a) Ensure that you can measure your goals. Some say you only get what you measure. (b) Evaluation takes time and effort. Look at what went wrong and what went right, assess future performance and what needs to change and compare current to desired outcomes. (c) We all correct well but few of us stop to reward well. From a pat on the back, to a restaurant voucher, to a monetary incentive to a large bonus – all Reward is good to ensure continued performance to goals. (d) Feedback is the process that informs direction. Think of it this way, you get to a destination by steering the car away from deviation and putting it back on course over and over again. Management Control is just like that and is mission critical to Execution.

  1. Hard work

The founder of Twitter was interviewed the other day. Asked about their success he retorted: Isn’t it funny how 10 years of hard work looks like an instant success? To the same point, many years ago our Bank came up with a slogan: Work smarter not harder, as part of a values campaign. I’ve got to be honest, I have never understood that and have always resorted to hard work, the right kind of focussed work, as a prerequisite for success. Continual attention to detail, looking for new things, personal application to the task, risk management and expenditure of effort has a way of winning through. I know successful people and all of them look like an instant success after years of hard work and sacrifice. Why should you and I be any different? In the process, don’t ignore three things: Exercise, Eating and Sleep.

Execution makes the difference between success and failure. In between is mediocrity. Only Success is desirable. 2016 can only be successful against a Plan that is well Executed. Otherwise hope for a geluksskoot [“a lucky shot”]. On the other hand, it is highly probable that a well-considered Plan and a great Execution will pay you rich dividends and serve others in the process. Why would you choose anything less for yourself and those you value?

There is one more ingredient, I believe. People.

Yours in Property

If you knew you had December to make your business highly successful in 2016, what would you do?

“‘Tis the Season to be jolly tralalalalalalalah”.

So the carol goes. But just reading the pre-reporting on the Fitch rating which may see SA Inc achieve junk bond status on 4 December 2015, the “jolly” turns to “golly” in one foul swoop.

So for that reason, at the entree to this beautiful Christmas Season [I really struggle with “the Holidays” so please forgive me], I deem it a good idea to write a trilogy of uplifting articles. Trilogy, because I also need a break between Christmas, that very special Holiday, and New Year, that time when all the resolutions kick in.

If you knew you had December to make your business [read Life, if you will] highly successful in 2016, what would you do? Run for the hills, Dream big, Plan, Act, Take advice, Retrench your dead wood, Drink champagne, Motivate your people, Have a workshop, Write your thoughts down, [Eat, Love and] Pray; really, what would you do? This is the month of determination; in it you set the course for all that achieves success in 2016 – so what would you do?

We don’t know your circumstances, but if you’re reading this blog, you probably are a person who seeks to learn by being informed and challenged. You probably take the smallest scraps of thinking and learning and coagulate them into something you can work with to develop yourself and your relationships and your business. If you’re that kind of person, read on. Below are four major highlights that will define your year commercially and which deserve attention this month before you take a break. Four is not magical and I’m sure there may be more for you. However, dedicated focus on these four things are proven to be key ingredients of success.

First, an anecdote from my days at Nedbank.  At one Homeloan conference, a thoughtful organiser put a small card on my pillow that said: To accomplish great things, we must dream as well as act. The quote was by the famous French poet, journalist and novelist, Anatole France, who was awarded the Nobel peace prize for Literature in 1921. Another anecdote, which quote by Zig Ziglar I sent to my Son a few days ago, is: When you catch a glimpse of your potential, that’s when passion is born.

1.Set a Vision bigger than you

You see, Anatole was right to call the dream into being. Nothing in the conditionality he places on action detracts from our God-given right and responsibility to dream. There is  a thought that if your dream doesn’t scare you, it isn’t big enough. I would say that is extreme but something in there does raise the bar. My school motto is Per Ardua ad Astra which means “By hard work to the Stars”. I like that and wouldn’t if I believed in get-rich-quick schemes. It’s the “to the Stars” part that lifts your chin, drives out your fears and burns in your heart. It is the Vision in you that keeps you constantly thinking, wondering, searching and striving until you find the Confidence that this dream, this Vision, is for you. If you can’t buy the “hyper” in what I’m saying, then think about this – What would you like to change so that you double what you have now in one year? Sales, originations, the depth of a relationship, turnover or money? What would it take to do that versus what price you are prepared to pay? If the formula is acceptable to you, then what stops you from achieving that dream? In the stating of it comes the angst of how I would do it; in the envisioning lies the challenge and the risk. But without the genesis of this thought “any ol’ place” would be good enough. If there ever was a distinction between our soul and our spirit, it would be the deep desire for more that lies in the spirit. You can be content with what you have and where you are or you can begin to thirst for more. Set a Vision that is bigger than you. 

2.Determine the time-frame and set the milestones that need to be achieved

Bring your Vision down to earth. Unless you’re a dreamer, dreaming is a beginning but not the desired outcome. Our minds love pictures and can bathe themselves in daydreams and images all day long. Sweet dreams we say to our loved ones, but then they’re going to sleep! Given our December challenge above, there’s no time for sleeping just yet. We can rest later. You need to begin to think out what milestones will direct your achievement and when you would expect to see them on the journey to success. To keep it simple, milestones are quantitative indicators of your achievement. Think of it like this: any salesman loves the “hockey stick” approach to his annual goal. For years I’ve seen that, off target up to September, the super-salesman thinks he can achieve the rest in the last quarter. True maybe, if you’re GM of a holiday resort, but for the rest of us mere mortals, you probably can’t “shoot the lights out” in the final sprint any more than you could in the previous 3 quarters. Salespeople, yes you and me my Originator and Estate Agent friends, love the hockey stick and it’s expected air-punch but, alas, it seldom works. If you’re travelling Joburg to Cape Town in 14 hours, doing 90km/hour for the first 900kms will leave you with much catch-up from Worcester. The problem then is you hit law enforcement, sharp bends through the Hex and more traffic. Life and its achievement is no different and by the time you realise your mistake, it’s too late. From a brain point of view, as you click from the Vision in the right brain, you enter the Reality of the left brain. There you need milestones and a good sense of timing to keep focused on the destination.Determine the time frame and set the milestones that need to be achieved.

  1. Set the goals for the milestones

In point 2 I said the milestones are indicators. Give or take an hour or 30 kilometres, not achieving a particular milestone is not a major issue when you’re on the road. But in business, indications are not enough. Goals are required. If you look at the five pillars of Management Control: Set the Goal, Measure Performance, Evaluate Performance, Correct or Reward and Feedback [into Goal Setting], then you can see that a process is required to control an outcome. “Ag, it’s only 30 minutes” is fine for normal day-to-day driving, but winning rally drivers have their navigators assess their progress by the second, literally. Goals enable the fine tuning necessary for specific achievement. Goals are the hard rock of success. Over is good but Under is simply not acceptable to a Winner. Setting goals is hard work. You need to think and challenge yourself and re-think. You need to drill down into the milestones, decide on the price you’re prepared to pay and then drive out the appropriate, non-negotiable goals you want to achieve. Anything less in a plan is simply wishful thinking and the next time to get to think about it, you’ll be facing the indeterminable “hockey stick” reality. Set the goals for the milestones. Now!

  1. Write down the plan of action

In the Good Book, Habakkuk was told to write the vision down. Hey but it such a cool Vision, why not just announce it and turn it into reality. The reason was simple: We Forget. The plan is the document where you write down the Vision, its milestones and the goals. Then you write down the actions required and mentally rank their level of difficulty so as to understand the obstacles to their achievement. What you need to overcome is as important as prerequisites. You can reach for the stars as long as you like but you better get a ladder or “go virtual”. Not seeing these obstacles to a Plan and dealing them upfront is a figment of the imagination. One word of caution though, as I revert to this almost mathematical process.  Entrepreneurs see the vision, the milestones, the goals and the action plan but often choose to ignore the requirements. Sheer passion says I will [read: want to] do this “whatever it takes”. Fundamental to this approach and attitude is that I am a firm believer that Risk and its concomitant action, Risk Management, is fundamental to success. Entering a business, creating a BIHAG [Big Hairy Audacious Gaol], deciding to marry, all require you to take risks and then manage them. Why? Well, on the one hand, little goals are “more of the same”, they’re incremental and risk mitigating whilst big goals need you to jump at some stage. Once you jump, you’re committed; no turning back. On the other hand, you just cannot see all the pitfalls in the beginning. We often read about the overcoming of a Hilary Tensing team, Ford and Edison. The question is would they have started in the first place if they knew what they would face along the journey? You can’t see it all and the bigger the goal, the longer the timeframe, so the less you can see. But what Reward awaits Success! Write down the plan of action.

So there you have it plain and simple. You now have a choice, get ready to go on leave and just enjoy the silly season, or, do the hard yard to revolutionise your circumstances. It’s always a choice and the choice confronts us many time about many things in life.

In our next part of the trilogy, we’ll have a look at Execution. It truly is the sine qua non of Success. It is the as well as act of Anatole’s quote.

Homeloan Junction epitomises what we’re speaking about. It was built out of the ashes of Sub-Prime to be a top Performer in Evo, Ooba’s Aggregation business, in a few years. Why not approach us to see how we could help you turn your dreams for starting an origination business, or multiplying your existing success, into reality?

Yours in Property.

Interest rate hike comes as no surprise

This week’s interest rate hike comes as no surprise.

This statement, not in the sense that I think we should have it, but simply that the matter is so “on the fence” that the decision could go either way in any of the MPC meetings. The SARB is faced with horrible decisions because GDP growth is pathetic and nothing exists on the horizon to change the situation. You get the feeling that the world economy is moribund as the USA growth story is so fragile and based on the billions of printed Dollars, whilst the China story has been coming for some time and now that it has hit, seems obvious and irreversible in the medium-term [make that 3-5 years]. The impact of both on South Africa is direct and inescapable – the USA is needed for global growth particularly amongst our leading trade partners and we critically need China to buy our primary commodities [frankly, so do Australia and many other so-called development economies, in Africa, Asia and South America]. The Rand is weak and we sit with the Rating agencies’ threat of junk bond status hovering like Damocles’ sword over our national head.

Talking about our “sword of Damocles”, according to Wikipedia:

“Damocles (literally: “fame of the people”) is a figure featured in a single moral anecdote commonly referred to as “the Sword of Damocles”, an allusion to the imminent and ever-present peril faced by those in positions of power. The Damocles of the anecdote was an obsequious courtier in the court of Dionysius II of Syracuse, a 4th-century BC tyrant of Syracuse, Sicily. According to the story, Damocles was pandering to Dionysus, his king, and exclaimed to him that he was truly fortunate as a great man of power and authority, surrounded by magnificence. Dionysius then offered to switch places with Damocles so that Damocles could taste that very fortune first-hand. Damocles quickly and eagerly accepted the king’s proposal. Damocles sat down in the king’s throne surrounded by every luxury, but Dionysius arranged that a huge sword should hang above the throne, held at the pommel only by a single hair of a horse’s tail. Damocles finally begged the king that he be allowed to depart because he no longer wanted to be so fortunate, realizing that with great fortune and power comes also great responsibility (and danger). “

The decision to raise the Repo rate is as tense. We are told that the USA has to raise rates at some stage so as to protect inflation in that country from raising its head as growth rates rise. In addition, there is justifiable concern that not signalling a rise of interest rates will over-stimulate the propensity of the American public to spend on credit. Many consider that the rise of the rate will occur later this month partly to curtail overspending for Christmas. For SA Inc, this means that money will be invested in the Dollar and our currency will weaken further. Roll on R15 to the US$ which will have its own impact on our inflation and require rate rises to temper it. Not pretty by any means. But remember to see the interest rate rise in relative and not absolute terms. When it started, our Repo rate was 5% and the 0.25% absolute increase was a 5% rise in interest cost. This rise, off a base of 6% was absolute 0.25% but only a 4.2% rise in interest cost. The Prime rate is still below 10%, psychologically in  single digit territory. To put it in monetary terms with which we may better identify, a R1m bond just became R164 per month more expensive with a total of R807 per month in total since the upward rate cycle began, which is 2% and 9% relative increase in interest costs, respectively. Necessary? If the USA rate rises, yes; if not, then no, too much too soon in a struggling economy.

However, don’t lose heart. The increases are really well controlled and pre-emptive. In the figure below you will note how interest increases have been cone-shaped in the past – steep and effective but with the risk of collateral damage. In the recent rate increases, much circumspection has gone into grasping the nettle early but not squeezing the life out of the economy.

South African Repurchase Rate

With this background, I was struck by a Moneyweb article by Patrick Cairns on 20 November 2015, titled, South Africa needs a “Modi moment”.

We have a great country, tortured yet beautiful. We have people with a will to stay here and continue to make it greater. We need leadership in every sector but are blessed with good examples in the property industry. Our estate agencies, originators, developers and property funds are world-class in many respects. So we in property are truly blessed. Homeloan Junction is proud of its place in the tapestry of the industry, small but well deserved.

Yours in Property

How to pay off your home loan faster

Does the thought of twenty or thirty years of home loan repayments put you off buying a home? Even your dream home can start to look less dreamy when you’re faced with what looks like a life sentence of hefty monthly repayments. But what if there was a way to reduce this period … and reduce the total amount?

Buying a home is one the biggest financial investments most of us will make, yet how many of us are aware that small additional payments on your home loan can have a major impact on the final amount you will end up paying for your home? The biggest burden facing homeowners with a bond is the interest they will pay over a 20 or 30 year period.

Say you take a R1 million home loan over 20 years, no deposit and at the current prime lending rate of 9.5%;  you will end up paying R2 237 115 for your home. That’s enough to give anyone grey hair! But, before you lose heart, there are a number of steps you can take to pay your bond off faster … and significantly reduce that final figure!

Take a look at these 5 clever ways to bring down your home loan repayments:

Pay your salary into your Bond

I know it might sound strange, but as long as you have an access account enabled on your bond you can actually pay your salary into your home loan every month and then simply transfer out money needed for debit orders and day to day spending when you need it.

Here are the advantages of doing this:

– Benefit from lower interest rates applicable to the outstanding amount on your home loan
– Inadvertently use your home loan account as a savings account and pay off your home loan faster

Make Additional Payments

Fast track the repayment of your home loan by putting any surplus cash, like your bonus cheque or SARS refund, you have into your bond. Yes, this does require discipline and a measure of sacrifice but the long-term gain on your home loan is well worth it. Take for example, an additional R1200 paid towards your R1 million home loan every month, over and above the monthly instalment (R9 321 in this case) owed, and you’re looking at saving R374 344 in interest … and cutting your repayment period down to 14.75 years.

 Put Down a Deposit

If you are still in the planning phase of purchasing a home, consider putting down a deposit rather than taking a 100% bond. The bigger the deposit you’re able to put down, the smaller your home loan and the less interest you will pay. On a R1 million home, a deposit of R120 000 will reduce the interest you owe on the outstanding capital to R1 088 661. That is a straight up saving of R268 454 before you’ve even considered taking any of the additional actions discussed above. Calculate how much a deposit can save you, by viewing our Bond Repayment Calculator.

Ignore Rate Fluctuations

While you have no choice but to make increased monthly instalments should the prime lending rate increase, heaven forbid, it is a wise choice to keep your instalments steady in the event the rate decreases as this gives you an automatic gain on your bond. You’re already committed to paying a certain instalment so sticking to this amount should the rate drop gives you an added advantage in paying off your home loan that much faster.

Explore Your Home Loan Options

It doesn’t hurt to explore your options in order to secure an even better rate on your bond. Talk to a bond originator like Homeloan Junction. If you have a good repayment track record and credit history, who knows, they may just be able to negotiate a reduced interest rate. Even a 0.5% reduction can represent a significant saving; that is R77 773 saved on a R1 million bond over 20 years with no deposit down. Should you decide to switch home loan providers, be sure that the cancellation and penalty fees you’ll inevitably be charged will not outweigh your prospective savings.

As you can see, a little commitment and discipline can go a long way to alleviating the burden of your bond. And at the end of the day, paying off your bond faster and reducing the amount of interest you owe on your home loan translates to money in your pocket. This can be used towards your retirement, your children’s university fees, a world cruise or perhaps an investment property.

Yours in Property


It’s time to be a Fox

Howzit China! will certainly be on our lips after the global markets slumped this week in response to the yuan decline and other economic news. Our real good news is that some experts are questioning our SARB decision to raise interest rates in the face of a deteriorating market for consumers.

So it is time to pick ourselves up, improve our game and focus our efforts. It’s time to be a Fox.

I first heard the concept from Clem Suntner when I read his book Hedgehogs and Foxes. The article below is copied from Business Day and was written by Michel Pireu on 18 August 2015. All credit to him therefor for the first part of this blog.

In 1953 the philosopher Isaiah Berlin divided thinkers into two categories – the hedgehog and the fox – borrowing from Greek philosopher Archilochus who said, “The fox knows many things, but the hedgehog knows one big thing.” Hedgehogs, argued Berlin, see the world through the prism of a single overriding idea, whereas foxes dart hither and thither, gathering inspiration from the widest variety of experiences and sources.

Recently, University of Pennsylvania psychology professor, Philip Tetlock conducted a multi-year study of the outcomes of expert political forecasts about international affairs. He studied the aggregate accuracy of 284 experts making 28000 forecasts looking for patterns in their success rates. Most findings were negative – conservatives did no better or worse than liberals; optimists no better or worse than pessimists. All were only slightly more accurate than chance, and worse than basic computer algorithms. Only one pattern emerged: how you think matters more than what you think.

“ The most important factor was not how much education or experience the experts had but how they thought, “ says Tetlock. “The better forecasters were like Berlin’s foxes: self-critical, eclectic thinkers who were willing to update their beliefs when faced with contrary evidence, were doubtful of grand schemes, and were rather modest about their predictive ability. The less successful forecasters were like hedgehogs: they tended to have one big, beautiful idea that they loved to stretch, sometimes to breaking point.”

Beginning with the idea that foxes are better at predictions than hedgehogs. Tetlock looked at the underlying differences in cognitive approach and found clear differences. Foxes are cautious about making predictions. Hedgehogs are not, but are more likely to suffer from overconfidence and hindsight bias. Foxes are avid gatherers of ideas from many sources. Hedgehogs specialise and resent ideas that contradict their thinking.

If something isn’t working foxes will look for a new idea or model. Hedgehogs seldom vary their approach and are more likely to use new data to tweak existing theories. Foxes readily accept they’re wrong. Foxes accept complexity. Hedgehogs believe in an underlying simplicity in everything. Foxes are more concerned with the evidence than the theory; hedgehogs see data as “noise” that obscures underlying truth. Consequently, foxes are better equipped to survive in rapidly changing environments in which those who abandon bad ideas quickly hold the advantage. Hedgehogs are better off in static environments that reward persisting with tried formulas.

Little did I realise on the 18th that the global economy would take such a fast turn. In our next blog, we will look at the whether a fox or a hedgehog is needed for the next period of what has been a fairly good run in the property market. Look forward to “meeting you again, at the Junction”, that’s the Homeloan Junction, of course.

Yours in Property.

Take control of your monthly expenses today! [Free HLJ Budget Tool]

Funny how things happen at the same time!

In this post we will give you our Homeloan Junction Budget Tool and refer to a Moneyweb Today article. The Moneyweb post arrived just as I put the finishing touches to the HLJ Budget Tool. Serendipitous, I would say!

So why the Tool?

Most of us don’t have a budget. We live from hand-to-mouth, month-to-month and while away our time and our money on necessities and fancies. The danger is that as this forms a habit pattern, we wonder where the money’s gone and why there’s so much month. Month after month, year after year, we live as if there is no tomorrow financially. Often, if we’re really honest with ourselves, we take on bad habits in the process – we eat, drink and smoke too much. After all, life is stressful, you know. Then, we may rack up some unexpected medical bills in the process as we get older. All part of life, you know.

6% of South Africans can retire comfortably. In case you wonder about the other 94%, they don’t retire comfortably by level of degree.

What we mean by that is that the next 6 % below the “comfortable 6%”, live a little less than “comfortable”. Starting to experience the world of retirement myself a little, I have family in their 80’s. Retired since age 58, 25 years later they’re finding prices very high. Thank Goodness, they have not squandered their money but things are tight – much tighter than when they retired.

What we learn from this is that retiring with income that rises, or is supplemented with assets that may be sold, is wise financial planning. So, the next 6% behind the second 6%, is probably already not ready to retire at all in South Africa; of a truth, the situation quickly becomes dire and a Government pension of about R1600 per month, rising at 6-7% per annum, does not satisfy even basic needs.

Everything in our beautiful, tortured country points to sadness as we ponder these thoughts. My wife read me an article the other day that said one of the greatest gifts you can give your children is to not be a burden to them in your retirement. Oh may that be a simple goal for you when you finish reading this blog!

Get the full Moneyweb article here – MONEYWEB-TODAY-ARTICLE.pdf

Using elementary Excel, I have created a Tool for you to budget. Customise it for your own circumstances and please note that the numbers are just examples, so put your own in.The Tool allows for your Gross Income. It then deducts your direct expenses like UIF, Income Tax etc to arrive at your Net Income Before Expenses.

Then it deducts two kinds of Expenses: Need To Have’s and Want To Have’s. Call them what you want and re-arrange the items as you wish [after all, we need a little retail therapy or entertainment some time J] but just be true to yourself. Question what you earn and what you spend honestly. Commission earners especially project their earnings – like true sales people, they often believe they are going to earn more and spend less than they really do over the long-run. Don’t fool yourself. And, if you really want to test your reality, then commit to an extra amount repaid monthly on your bond and see how good you are at sticking at it.

You can download your copy of this tool here –HLJ-Budget-Tool.xls 

The point is, every few hundred Rands you save in this exercise could literally put you into the top 6% at retirement. And, keep you there.

 Now to the final points……….

1. I am not a financial advisor, so speak to yours and begin to commit to a long-term savings plan. Retirement Annuities, Satrix, DBX’s etc are great vehicles to discipline your savings. And, by the way, remember some Life and Disability cover for those you love, if you don’t make it.

I have tried to teach all financial levels of people the simple fact of compounded interest. By the way, Albert Einstein called it his “most profound” learning. Two elements for now:

  • R100 invested for 10 years and 20 years at 8% is R18294.60 and R58902.04 respectively. The compounding is not a straight line as interest on interest continues to kick in the more you save.
  • The inverse of this, which the Insurance industry correctly calls “the cost of delay”, is that if you want R60000 , then the faster you start saving the less you have to save. R60000 costs you R101.86 over 20 years and R327.97 over 10 years, both at 8%.

2. I am a banker, so back to the tired old truth that your bond is a good place to save. Whatever interest you save is at your bond rate after tax.

For example, at a bond rate of 10%:

Bond: R80000
Years to go: 20
Repayment: R7720.17
Total Paid: R1852841.56
Interest spent: R1052841.56
Payment increase of 20%: R9264.21
Years to pay: 12.83 years
Total paid: R1426688.00

Original total payment less new total payment: R1852841.56-R1426688.00 = R426153.56


Homeloan Junction cares. This blog may seem trite and simplistic to some. To others, it may just be the spark of new financial life. If it touches one life today then the last two hours writing and calculating has been worth every minute.

Yours in Property