Cairns Lockie Mortgage Commentary

Issue 2001/8 11 May 2001

Welcome to the eighth 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 11 May 2001) the money markets were at the following levels:

Official cash rate 6.00% (unchanged)
90 day bill rate 5.75 (down from 5.80)
1 year swap rate 5.65 (down from 5.70)
3 year swap rate 6.25 (down from 6.31)
10 year bond rate 6.43 (down from 6.45)
Kiwi dollar 0.4245 (up from 0.4130)

No Financials Home Loan Launched

Cairns Lockie is introducing a new product called the "No Financials Home Loan". The target group is the recently self employed. Someone may have left a successful corporate career to purchase a business, or recently migrated to New Zealand and so cannot really confirm their income. We see this product a filling a reasonable large niche, targeting groups which, in the past, have had some difficulty in obtaining finance.

Will the OCR Move Again?

Next week the Reserve Bank will review the Official Cash Rate (OCR). Market consensus expects the bank to reduce the rate by a further 25 basis points. At present the full 25bps is being priced into the physical market with the bill rate today at 5.75% - a full 25 basis point discount on the current cash rate. There are a number of positives in our economy at present: commodity exporters have seen some firming in prices over the previous few months; our dollar has recently firmed which will assist in dampening any inflationary expectations; and unemployment is at a thirteen year low.

Landonline Not Quite There

The computerisation of land title records by Land Information has commenced in the South Island, but it has not gone as smoothly as anticipated. Now Land Information's planned extension of the project in Wellington, is meeting some resistance. The Consulting Surveyors organisation believes the Wellington roll out is premature given the lengthy delays in plan processing in Otago and Canterbury. The roll out of Landonline in Auckland is now postponed until May 2002.

Competition Lowers Rates

KPMG, Chartered Accountants releases at this time each year a good independent report on the New Zealand banking sector. The 2001 Survey reports growth of $2.7 billion in the total mortgage market in New Zealand to almost $60 billion. Bank branch numbers have decreased from a high of just over 1,500 in 1995 to around 850 now. And Interest Margins have continued to decrease. Average margins for the banks have decreased from 2.9% to 2.6% in the past three years. We like to feel that the new non-bank mortgage lenders (including Cairns Lockie) are responsible for this, and consumers are getting the benefit through lower rates. The full survey can be ordered from KPMG at http://www.kpmg.co.nz

Our current mortgage interest rates are as follows

Variable rate 7.75%

Quick Start Home Loan 6.69 (new)
One-year fixed rate 7.10 (new)
Two-year fixed rate 7.20 (new)
Three-year fixed rate 7.50 (new)
Five-year fixed rate 7.80 (new)

Line of credit facility 8.10

Regards William Cairns James Lockie

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