Fixing of bonds - from Treoc.com

by Coert Coetzee
(Coert Coetzee is the Founder of the TREOC Group consisting out of different companies and trusts. He is an experienced Business Owner and Property Investor and shares his experience and secrets of many years.)


Fixing of bonds

In June 2006 I fixed some of my bonds, at an average rate of 10.6%, and in so doing missed the largest part of the last two years’ interest rate increases. The cycle has continued for longer than we expected though, due to numerous external factors, of which the record oil price is the most notable. In 2006 I fixed my rates for a two-year period, and this period will expire in June 2008.

When I fix interest rates, I never fix the rates on all my bonds. I usually fix half of my bonds and leave the others at the variable rate. I then always park my reserve cash in the bonds with the highest rates. If the interest rates peak sooner than I expect and drop down below my fixed interest rate, then I move the money to the fixed rate bonds. In so doing, I have the best of both worlds. Of course, this method only works if you keep extra money in your bonds.

In June I will be coming off the fixed rate from two years ago, with the rates still high and a strong possibility of them rising further, so this week I fixed the bonds that weren’t already fixed, at an average rate of 15.3%. Fixed rates will vary from bank to bank and property to property, depending on your Loan-to-Value ratio.

The reason I have fixed now at such a high rate is that no-one can predict how high rates will actually go. High inflation is being driven by high oil prices, and I can’t see that this is going to change in a hurry. Although I said at the seminar a few years ago that I didn’t think we would reach 1998’s high of 25.5%, this is now starting to look more and more like a possibility. Let’s hope I’m wrong and that it comes down soon. Then I will simply move the money to the bonds with the highest rates. If not, fortunately my rates will be fixed like in 1998, when I fixed at 17%. At that stage people were already saying I was crazy to fix so high, but it worked!

Whether you fix or not is your choice. All that I want to achieve with this message is to make you aware of the possibilities and to inform you of my decision, as I always promise I will. Whatever the case, make sure that you can afford what you are doing. One of the golden rules of the Treoc Way is affordability. Never disregard this. This is why the Treoc Investor software allows you to play with “what if” scenarios.

How to utilize the buyer’s market

The present market conditions are bringing us fantastic buying opportunities. At Treoc we recently developed two revolutionary products that will be to the benefit of buyers as well as sellers. These products are going to be the “talk of the town” because they will give immediate relieve of bond payments to people in trouble and they will secure huge bargains for people with affordability irrespective of whether they can qualify for a bond or not. It is the first bond free purchase method of it’s kind in South Africa. We will launch it in the next issue of the Treoc Times. It will also form part of future seminars. Be sure not to miss it!