Cairns Lockie Mortgage Commentary 2001/1
Issue 2001/1 2 February 2001
Welcome to the first Cairns Lockie Mortgage Commentary for 2001. 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 http://www.emortgage.co.nz/newsletters.htm
The Money Market
This evening (5pm on 1 February 2001) the money markets were at the following levels:
Official cash rate
90 day bill rate 6.45 (down from 6.75)
1 year swap rate 6.00 (down from 6.84)
3 year swap rate 6.05 (down from 6.72)
10 year bond rate 5.94 (down from 6.16)
Kiwi dollar 0.4445 (up from 0.4220)
Cairns Lockie is Now Two Years Old
We are now two years old. During that time we have seen considerable innovation within the mortgage area. On the positive side, the establishment of the non-bank sector has brought borrowers a number of benefits. These include some attractive interest rates which in most cases the banks have forced to match, considerable product development such as, lines of credit and more flexible lending options. For example if you use your house as security, whatever your loan purpose, you will pay only the residential rate.
Other developments have occurred, which would have offered benefits to the consumer but have not been so successful. These have included the establishment of the internet broking company, Eloan, real estate agent mortgage company, Direct Home Loans and finally the real estate company established by a group of lawyers, Real Limited. On the horizon, we have the likely establishment of the Peoples' Bank. Given the competition in the market and the low margins, it seems unlikely that this new venture will be a roaring success.
Official Cash Rate Remains Unchanged
Last week the Reserve Bank announced that the Official Cash Rate (OCR) would remain at 6.50%.
This was after the statement in December saying that rates may have to be tightened early in the New Year. The reason for the change of stance was the rapid change in the international economies. The United States is experiencing a slowdown, with talk of a mild recession. Australia and some parts of Asia are seeing a similar slowdown. In response to this the United States has already cut its discount rate by 1.0% and economists in Australia believe there will also be a cut in rates in their country next week.
With World interest rates appearing to be heading downwards, and slower international growth, opinion in this country expects our rates to be decreased in April. If this happens, a decrease in our floating mortgage rates will follow.
Make it Snappy
One electronic newspaper we rate highly is Good Returns. It has a mortgage section as part of it. One recent article entitled "Make it Snappy" offered some good advice on how to obtain a quick approval from a lender. We are always stressing it is up to the borrower to decide whether or not a quick approval will be received. The secret is completing the necessary application form and having the right supporting information. To read the article in full visit http://www.goodreturns.co.nz and then go to the mortgage section.
Mortgage Rates in Australia
The OCR in Australia is 25 basis points below ours. As a result their rates are 0.25% to 0.50% basis points below ours. Floating rates range from 7.49% to 8.39% and fixed rates range from 6.89% to 7.35%.
Our current mortgage interest rates are as follows
Variable rate 8.25%
Quick Start Home Loan 7.25 (new)
One-year fixed rate 7.45 (new)
Two-year fixed rate 7.45 (new)
Three-year fixed rate 7.55 (new)
Five-year fixed rate 7.65 (new)
Line of credit facility 8.60