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WELCOME

Hello and welcome to the first edition of The Bridge newsletter. Each quarter we will bring you relevant information about what’s happening in our economic environment, credit policy pointers and any other relevant tidbits of information.

We hope you enjoy it, and until next time, take care.

Dewaal Basson
National Sales and Marketing Manager

COMMITTED TO YOUR SUCCESS

At Quince Property Finance we are committed to delivering a fast, simple and accurate service. Our product is easy to use which in turn makes it that bit easier to sell. We are here to support you every step of the way, after all, if you do well, we do well. It’s that simple.

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The Office team - Cape Town

LET US BE THE JUDGE

In the wake of the recent credit crunch and higher interest rates, people are struggling to meet their financial obligations. This can often lead to creditors obtaining default judgements against such individuals. Tinus van Kampen, Operations Manager of Quince Property Finance takes a closer look as to what this means in terms of approving applications for bridging finance.

Quince is obliged to do a credit check on any individual that is applying for bridging finance, in order to comply with the National Credit Act. If Quince advances a loan without taking into account the credit history and indebtedness of a borrower, the loan might be regarded as reckless. If an agreement is declared reckless, the court may set aside all or part of the consumer’s obligations under the agreement. Quince therefore obtains a report on the credit history of the prospective client and this would normally identify any judgements the prospective client may have.

The question then arises whether Quince will provide bridging finance to individuals with judgements. The answer is yes. Individuals with judgements can still successfully apply for bridging finance. We do however take the judgements into account in deciding whether we will approve or decline an application. Factors that will influence the decision will be the nature and recentness of the judgements, the Rand value and the number of judgements.

So please send us your bridging finance applications and we will gladly assist prospective clients during these tough times.

LIGHT AT THE END OF THE PROPERTY MARKET TUNNEL?

Although the property market has been feeling the pinch in the current economic climate, Johann le Roux, General Manager of Quince Property Finance, believes that while times are still tough, there might be light at the end of the property tunnel. Here’s why:

2008 has been a depressed year in the property market, with many consumers reluctant to buy. The number and value of transfers at the deeds office speak for themselves.

Looking at registrations at the deeds offices there were 83 587 transfers (value: R37,6m) in the 1st quarter of 2006. These numbers grew steadily, and peaked in the 3rd quarter of 2006 with 99 959 transfers (value: R63,9m). With the exception of the 3rd quarter of 2007 there has been a steady decline in the number of transfers registering at the deeds office. The latest numbers from the deeds office show that in the 2nd quarter of 2008 only 75 337 transfers (R47,46m) took place.

However, there is light at the end of the tunnel. In Property Mortgage Market Update - September 2008, John Loos points out that “plummeting New Mortgage Loans are helping to stabilise the household debt situation”. He adds that outstanding household debt has been slowing steadily since 2006, leading to a decline in debt-to-disposable income ratio, which is crucial for a residential market recovery.

Figures released by First National Bank indicate that price deflation has already been in progress for six consecutive months since March 2008. Around 5% year-on-year deflation is expected in the first half of 2009, before price inflation resumes late next year on the back of recovering economic growth and declining interest rates. This confirms that the property market follows cycles. Some economists even suggest that we may have reached the bottom of the current cycle, with a recovery predicted in 2009.

Another positive sign is that the South African Reserve Bank (SARB) did not increase the repo rate in October, which could indicate the peak of the interest rate cycle. Some economists are predicting interest rate cuts as early as December 2008. They are also expecting nominal interest rates to fall steadily at every Monetary Policy Committee meeting, with prime falling from the current 15.5% to 13% in the second half of 2009.

Furthermore, the current market activity slump and deflated prices may work to investors’ advantage. Many will see the present as the best time to go out and scoop up some of the bargains that have not been around in the past few years. Michael Jackson, editor of the Property Professional magazine, recently said in his editorial: “Let’s get it straight: the property boom is over. The property market isn’t.” We couldn’t agree more.

As always, Quince Property Finance is on standby to help your clients secure the necessary finance.

QUOTE FOR THE QUARTER

“As we sail through life, don’t avoid rough waters, sail on because calm waters won’t make a skillful sailor.” — Unknown