Cairns Lockie Mortgage Commentary No 13

Cairns Lockie Mortgage Commentary

Issue 2001/13 20 July 2001

Welcome to the lucky thirteenth 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 (9am on 20 July 2001) the money markets were at the following levels:

Official cash rate 5.75% (unchanged)
90 day bill rate 5.78 (down from 5.80)
1 year swap rate 5.93 (down from 5.99)
3 year swap rate 6.74 (down from 6.89)
10 year bond rate 6.67 (down from 6.80)
Kiwi dollar 0.4135 (up from 0.4037)
No Financials Mortgages Really Hot

We have been receiving a lot of enquiry about our no financials home loan. This loan is best suited to the self-employed or those starting a business and as yet unable to produce historical financials. Recently arrived New Zealanders without a local employment history also benefit from this loan product, which as far as we know is not being offered by the trading banks. Another first for Cairns Lockie. Check out the details at http://www.emortgage.co.nz/terms.htm#nofin

Economic Update

The news this week was that the consumer price index increased by just under 1% for the June quarter. The reasons for this were higher petrol prices, airfares and food prices. This will take our annual inflation rate to 3.2%. There are several positive signs in the economy with retail sales up and commodity prices holding up as well. Job advertisements rose by 4.2% in June. GDP growth which was basically neutral in the first quarter of the year is expected to grow by 1% in the June quarter. All this will have a bearing when the Reserve Bank next reviews the Official Cash Rate on August 15th. Consensus suggests that there is a 50:50 chance of the cash rate being reviewed downwards.

Houses More Affordable

Over the past nine months mortgage rates have eased, there has been a nominal increase in wages, together with static or some actual decreases in house prices. Thus the cost of home ownership is lower. This is confirmed in the latest AMP Banking home loan affordability survey, conducted by Massey University. Comparing June this year with June last year, houses on average are 8.6% more affordable. In the regions with lower house prices, such as a number of places in the South Island, this is even more marked. Our discussions with estate agents and valuers tend to support our observation that there is a little bit more activity returning to the real estate markets.

Greener Grass Across the Tasman?

How do our mortgage rates compare with those across the Tasman? Many New Zealanders own property in Australia, and others like to compare conditions at home with those across the Tasman. Mortgage rates are a little lower. Floating rates range from 6.2% to 6.9% with the average around 6.8%. Fixed rates range from 6.5% through to 7.5%. Our floating rates range from around 7.3% to 7.7% and three years fixed rates from 7.85% to 8.1%. Rates across the Tasman are roughly one percent lower but there is a much greater range within each period band. The competition is most intense in the floating rate area, with over 90% of all mortgages written at the floating rate. In NZ a much larger number of people fix, but this is probably due to the recent negative yield curve with borrowers here just going to the cheapest part of the curve.

Our current mortgage interest rates are as follows

Variable rate 7.40%

No Financials Home Loan 8.40

Quick Start Home Loan 6.69

One-year fixed rate 7.10
Two-year fixed rate 7.65
Three-year fixed rate 7.94
Five-year fixed rate 8.19

Line of credit facility 7.75

Regards
William Cairns
James Lockie

Cairns Lockie Limited
PO Box 74-212, Market Road, Auckland
Telephone (09) 525 9711
Facsimile (09) 579 7795
Website http://www.emortgage.co.nz
Email mailto:wcairns@emortgage.co.nz
mailto:jlockie@emortgage.co.nz
mailto:gslade@emortgage.co.nz
mailto:sgasson@emortgage.co.nz
mailto:plange@emortgage.co.nz

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