Bond applications from high-nett-worth individuals can also be turned down

This is part of a national trend which FNB's property leader sales strategist, Clinton Martle, recently identified in a talk to Rawson Finance staff. Martle said that the younger generation at the coast tends to move to Gauteng, possibly to improve their income, whilst the older generation tends to come south.

Many potential property buyers, but especially those older people who have not recently been involved in property dealing, are dismayed to find that after identifying a property or an area that they like, they do not qualify for a bond these days - even though in South African terms they are high earners with salaries of anything from R25 000 to R100 000 per month.

Banks' new credit criteria

The sad truth that they then have to face is that under the banks' new credit criteria, their earnings/expenditure ratio makes them a bad risk in today's stringent, overexposed economic conditions - and the fact that they may have large assets does not help them as the banks will focus on their income stream in relation to the regular/typical monthly payments and these will form the basis for their decision.

Nor will it help to argue, as many do, that their extra income from non-core sources, although possibly intermittent, is rock solidly reliable. As the banks see it, no investment is completely safe and they will want assurance that there is a comfortable buffer between monthly income and expenditure and that the income is assured. In particular, they are likely to take a negative view of too many high-flyer payments, for example: for luxury cars, expensive holidays, entertaining and too big a range of investments.

In a recent case, a Gauteng resident with a big income and four properties, three in holiday areas, had to sell one of the these before the bank would agree to his bond. He was also told to limit his fixed monthly personal expenditure to a specified amount.

FNB's property barometer statistics indicate that the largest portion (75%) of buyers is currently couples. Single males comprise around 14% and single females around 11%. This last figure, although low, is a very big step up on the figures of 10 years ago.

Western Cape estate agents appear to be the most active

The barometer also indicates that the Western Cape estate agents appear to be the most active in the country; nevertheless it still takes, on average, some 20 weeks for a Cape home to find a buyer. This period shows no signs of shortening as yet. Homes are now selling, on average, within 10% of the asking price countrywide, a significant improvement on the situation last year.

I have been heartened to find that FNB now increasingly welcomes the participation of bond originators, such as Rawson Finance, and that these organisations continue to provide them with the largest portion of their bondable business.

One reason for this is that the involvement of a bond originator significantly reduces the very high time and expensive costs involved in a bond application process. Bond originators seldom allow an ill-qualified application to go forward and, if they do decide to back an applicant, they make sure that his documentation and credentials are in order.

The use of bond originators -those with qualified, sympathetic staff - is on the increase.

At Rawson Finance our turnover in October hit an all-time high, 20% up on that of the month before and then we had a similar 20% rise in November. Rawson Finance is now budgeting for a 50% increase by the end of 2013.

People sometimes do not realise that the services of a bond originator costs them nothing. If the bond application is unsuccessful the bond originator gets nothing. If the bond is granted, the originator's fee is paid by the bank.