Cairns Lockie Mortgage Commentary 2001/6

Cairns Lockie Mortgage Commentary

Issue 2001/6 12 April 2001

Welcome to the sixth 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 morning (10am on 12 April 2001) the money markets were at the following levels:

Official cash rate 6.25% (unchanged)
90 day bill rate 6.00 (down from 6.22)
1 year swap rate 5.74 (down from 5.90)
3 year swap rate 6.27 (up from 6.20)
10 year bond rate 6.23 (up from 6.00)
Kiwi dollar 0.4050 (down from 0.4110)

Where Are Interest Rates Heading?

In the past two weeks both Australia and United Kingdom have cut their Official Cash Rates (OCR). New Zealand is lagging. By not reducing our rate or by reducing it less than our main trading partners we are effectively running a tighter monetary policy than we were six months ago. While some sectors in our economy are doing reasonable well, the current world outlook is not particularly promising. This was further confirmed in the latest NZIER survey on business confidence, which showed businesses were less confident about the economy than they have recently been. Consensus opinion indicates that the Reserve Bank is likely to reduce the OCR at its next meeting on 19 April. The decrease will likely be 25 basis points. This will still leave room for the Bank to act further, if necessary, when it has its policy setting meeting in May.

Hockey Sponsorship Continues

In 1999 we sponsored the Auckland under 15 years girls representative hockey team. The team did not win the Collier Cup but did reasonably well. We are sponsoring them again this year. The team is one of twenty-eight competing in the National tournament. It can be said that women's hockey is on a bit of a roll at the moment. The sport has certainly benefited from extensive exposure at the recent Sydney Olympics. We wish them all the best and will keep you informed of progress.

Cairns Lockie Continues to Expand with General Finance Limited

That's correct. Last newsletter we announced that we established a mortgage nominee company. This week we have expanded our finance company, General Finance Limited. In addition to sourcing second mortgage business, General Finance will offer two new products. The first is a construction mortgage aimed at those wishing to build their own home, or an investment property. The second product is a "No Financials Home Loan" aimed at newer immigrants and the self employed. Both of these groups are likely to have reasonable equity but have difficulty confirming their income. We expect there to be considerable demand for both of these products.

Are More People Renting?

The number of private sector tenancies has increased from 90,000 in 1991 to 140,000 today. Home ownership has dropped, from a high in 1986 at 73.7% of all dwellings owned, to 71.0% in 1996. The Statistics Department, following the recent census, expects this to drop even further. On balance it would appear more people are renting but not significantly more. There are several reasons for this: people marrying later, changes in government policy, the effect of student loans on younger house buyers and changing lifestyles. People are more mobile and want flexibility in their living arrangements.

Our current mortgage interest rates are as follows

Variable rate 8.00%
Quick Start Home Loan 6.79
One-year fixed rate 7.20
Two-year fixed rate 7.15
Three-year fixed rate 7.25
Five-year fixed rate 7.40
Line of credit facility 8.35

Regards William Cairns James Lockie

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