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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2000/2 11 February 2000

Welcome to the second issue of the Cairns Lockie Mortgage Commentary for 2000. This is a fortnightly electronic newsletter which aims to keep you informed on developments at Cairns Lockie, Mortgage Bankers and the mortgage market in general. Previous issues of this commentary can be found on our website

The Money Market

Yesterday evening (4.30 pm on 10 February) the money markets were at the following levels:

Official cash rate 5.25%
90 day bill rate 5.87
1 year swap rate 6.95
3 year swap rate 7.80
10 year bond rate 7.40
Kiwi dollar 0.4930

Cairns Lockie Strengthens Presence in Christchurch

While it is still fair to say that we are an Auckland based company, we are increasingly helping clients in the Waikato, Wellington, Christchurch and even in some other locations such as Wanganui, Masterton and the Hawkes Bay. With modern means of communication such as the fax and the internet, we have the ability to deal with clients throughout New Zealand. This gives potential borrowers in regional centres the same access to attractive mortgage rates and products as those borrowers in the main cities. One area we are making inroads into, is Christchurch. Our mortgage rates are now being published every Wednesday in the Christchurch Press, so that our borrowers and introducers can be kept better informed.

What is Really Happening in the Residential Property Sector?

Over the past two months there have been a number of commentators expressing negative views on the residential property market. It is true that the last quarter of 1999 house sales were lower than the previous three-quarters of the year. However a full year comparison yields a different result. Housing transactions last year totalled 78,636, a 12.5% increase on the previous year. Prices increased by nearly 4% last year. In January 1999 the median house price in the country was $164,000 and by Decembe r 1999 this had increased to $170,000. We welcome plenty of dialogue on the property markets but somehow we get the feeling there is less analysis done on this sector than on the equity, bond or currency markets.

Residential Construction Market

The BNZ's Observer for February reports only slight growth (0.5%) in the number of permits issued for residential construction from November to December last year. They forecast for 2000-2001 that residential construction will go through a "correction", leaving overall construction numbers relatively firm. The NZIER's December survey of business opinion found that a net 5% of architects expected more work in the next five months on housing. This was down from 21% in the September quarter.

Consumer Magazine Cover Article on the Trading Banks

Consumer Institute publishes a monthly magazine on issues relevant to consumers. This month, an interesting article appeared on the trading banks. One area where there appears to be considerable customer dissatisfaction is the high level of ongoing monthly fees charged by banks. At Cairns Lockie, once your loan has been set up, there are no ongoing fees. We do not charge monthly, semi annual or further drawdown fees. You can use your line of credit as often as you like and there are no fees.

Our current interest rates are as follows

Variable rate 6.80%
Two-year fixed rate 8.45
Three-year fixed rate 8.75
Five-year fixed rate 9.15
Line of credit facility 7.15

Regards William Cairns James Lockie

Cairns Lockie Limited PO Box 74-212, Market Road, Auckland Telephone (09) 525 9711 Facsimile (09) 579 7795 Website


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