The Bond Man - Property Finance Consultants


Issue 11 / April 2008


The strange property market we find ourselves in has spawned a whole raft of characters we haven't seen in years.

The saddest of these is the seller who hasn't cottoned on to the fact that it's a buyer's market and is still holding out for a futuristic price. The FNB Home Loans Residential Property Barometer last month revealed that activity in the market had declined by 15% in the fourth quarter of last year, compared with the same quarter a year earlier. More than 80% of houses were now being sold for less than the asking price. Estate agents and most mortgage originators are having a rough ride. The Estate Agency Affairs Board reports that 26 000 estate agents out of the 82 000 it licensed last year did not renew their licences this year.

Amid the gloom, the properly qualified buyer holds the trump card. In the light of this, it is astonishing that even agents from the top companies are wasting their time with buyers who are not properly qualified. It's hard enough, in this market, to work a seller down to accepting a realistic offer. To achieve this and then have the deal fall out of bed because the buyer can't get a bond is unforgivable.

The banks no longer pre-qualify buyers and have shifted this responsibility onto the mortgage originators, most of whom couldn't be bothered with pre-approvals because they so seldom result in a registered bond. The Bond Man, by contrast, welcomes the opportunity to process pre-approvals and invites all prospective buyers to complete the 1-minute application on our website.


In my last newsletter, I posed the question "What would you do if you were Tito?"
This preceded the announcement by the Reserve Bank Govenor of the 8th interest rate hike in 12 months. The idea was to stimulate thinking on ways to fight the inflation monster by more creative means than mere knee-jerk responses. I was swamped by the number of suggestions that poured in. All were thought-provoking, many were innovative, some bizarre and others hilarious. My favourite responses were, alas, unprintable and in the end I opted for Thania Olivier's pragmatic approach as the winning entry. I was delighted to present her with the Balthazar of Laborie Cabernet Sauvignon 2002.

Now, far be it for The Bond Man to presume that readers of my newsletter had a hand in influencing Mr Mboweni's decision, but I did send a selection of your responses to the Reserve Bank's Monetary Policy Committee and, lo, amid overwhelming speculation that rates would rise again at the end of January, they held firm!

The reality is that the Governor remains hawkish and most economists predict a further 50 basis points rise when the MPC meets again next week. Dawie Roodt, chief economist at the Efficient Group, has called for a full 1% rise, arguing that "shock therapy" is needed to restore the bank's credibility as an inflation fighter. "We should take the knock now", he says. If Tito takes his advice, overdraft and mortgage rates wll rise to 15,5%.

Government cannot rely only on traditional monetary or fiscal policy solutions to combat inflation - a stable price level, minimal unemployment, as well as more long-term measures are required for bringing about a lasting decrease in inflation.

How to achieve these? Distinguish between two groups, each of which needs to be addressed:

  1. Fiscal & taxation proposals which would restrict the growth of lending - providing for short-term and medium-term policy implementation;
  2. Measures targeted at the labour market, productivity, energy and competition - providing for medium to long-term policy implementation.

Practically, issues such as the following could be looked at:

  • Revise budget base spending for all government departments with an aim to do away with unreasonable expenditure and to not increase the number of employees in the public sector.
  • Raise economic activity and boost productivity in the labour market; stimulate competition, especially in 'problem' areas such as retail and construction.
  • Impose a tax on income from the sale of real estate which the seller had owned for less than 3 years to curb 'speculation'.
  • Exercising tight measures on growth of lending as we've recently seen with implementation of the new Credit Act is a start. Furthermore, introduce a single 'body of borrowers' or ability to cover all financial institutions will allow for establishing the true extent of a client's debt commitments.
  • In the energy sector, boost energy efficiency and allow restriction of energy consumption in support of minimizing the effect that the expected rise in prices in this sector will have on households and businesses.


Allow me to take a friendly swipe at my friends and former colleagues at MortgageSA, which has just changed its name to ooba (I kid you not). Curiously, at the time of writing this, the company is putting out both MortgageSA and ooba ads in the print media, which must create enormous confusion.

South Africa's mortgage origination giants have virtually unlimited financial resources at their disposal, and access to the best ad agencies and creative brains in the land. As a one-man show with an almost non-existent marketing budget, I have always regarded these Goliaths with a mixture of envy and dismay. Some of the things they come up with leave me cold! How I would love to have been a fly on the wall in that shareholders' meeting when the new name was signed off. What stupendous powers of persuasion must have prevailed!

I visited their website to find out what ooba meant, but all I found was the following question: "Want to really understand what our brand stands for and how we get you closer to your ideal home? Take a look at our brand new TV commercial". It turns out that that's a rhetorical question. I looked at the brand new TV commercial. I taped it on my PVR and re-played it over and over again. I called in mates of mine from the advertising industry to view it and none of us could figure out what the brand stood for, let alone how it could get us closer to our ideal home.

Incidentally, if you thought that what was once SA's leading mortgage originator had secured its own dot com domain, think again.
Or, if you don't believe me, visit


The Property Magazine chose to profile The Bond Man in their March edition, the first time they've featured a mortgage originator in their Property Profile. Free publicity in a magnificent publication like this doesn't come round often and I was thrilled to be the subject of their lavish double page spread.

Click here for the full article


Those of you who are regular readers of The Property Magazine will be familiar with my monthly Ask The Bond Man column.

If you have any questions about bonds, please feel free to submit them here and I'll do my best to answer them. If your question is chosen for publication, you'll win a year's subscription to The Property Magazine

Click here to Ask The Bond Man


Gary Peterson
The Bond Man |


Asking price: R2,300,000
Double-storey cottage,

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Accommodation comprises 2 large bedrooms & bathroom upstairs, with the living area, kitchen & guest loo downstairs. The lounge has a cosy fireplace and double doors leading onto a sunny north facing garden with views over the harbour. Security system throughout and a lock-up garage.

For more information and to make an appointment to view, please contact Bernice Musikanth at Seeff on 021 423 9146 or click here to view the web page.

House Prices
In the 4th quarter of last year, house prices in the luxury segment (houses valued between R2,7m and R9,9m) increased by 7,7% y/y to about R4,2m on average in nominal terms (8,4% y/y in the third quarter). In real terms, prices dropped by 0,6% y/y in the fourth quarter compared with an increase of 1,3% in the third quarter. This has been the first real price decline recorded in the luxury segment since the fourth quarter of 2002, when a drop of 0,7% y/y was registered, and can be ascribed to deteriorating market conditions. - Source: ABSA Home Loans Housing Review

Penalty Interest Fee
We all know that you need to give the banks 90 days' notice of your intention to cancel a bond to avoid being hit with a punitive cancellation penalty, but until now the banks were happy to waive this penalty if your placed your next bond with them. Absa has announced that, with immediate effect, the Penalty Interest Fee may not be waived under any circumstances, even if the client places his next bond with Absa. Any home loan that is closed, where customers have failed to give Absa 90 days' prior notice of their intention of such closure, will attract 90 days' penalty interest. In cases where customers give notice within a shorter time frame than 90 days, the interest calculation will be reduced by such period (i.e. if a client gives notice 30 days before account closure, he will only be liable for the remaining 60 day period - 90 days less actual days notice given).

+27 (0)21 433 1060
Fax: +27 (0)21 433 1062
Mobile: +27 (0) 82 453 7374

Office address:

204 Main Road, Sea Point