Cairns Lockie Mortgage Commentary

Issue 2001/23 7 December 2001

Welcome to the twenty-third and last 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 (6pm on 6 December 2001) the money markets were at the following levels:

Official cash rate 4.75% (unchanged)
90 day bill rate 4.88 (down from 4.90)
1 year swap rate 4.96 (down from 5.06)
3 year swap rate 6.26 (up from 6.07)
10 year bond rate 6.51 (down from 6.61)
Kiwi dollar 0.4152 (up from 0.4100)

Mortgage Frauds and Scams Continue

Why are lenders fairly strict, requiring original documents, identification and making potential borrowers sign so many documents, thereby making the mortgage process more difficult and time consuming? The strictness is merely sound lending and to protect us against fraud. Mortgage related fraud is increasing. It is also becoming more sophisticated. A recent example was highlighted in the NZ Herald. It involved a fraudster who secured two mortgages over freehold properties he did not own. In order to complete the fraud, he opened false bank accounts, forged tax assessments, and birth certificates together with completing a declaration of the loss of a certificate of title. This is high level fraud and it is becoming more common.

BNZ Flies Into Global Problems

When Bank of New Zealand launched their Global Plus Air Points Programme (including mortgages), we acknowledged that it was a relatively good deal for borrowers but questioned who was going to pay for this costly marketing promotion. Already after a short period, the rules are changing and the clients getting less. After already reducing the Global Plus Mastercard time-to-pay, the BNZ have announced that Global Plus Mastercard holders will get 50% fewer air point and Global Plus Variable Rate Home Loan borrowers will suffer a 25% reduction. BNZ clients will now be evaluating how much value they are getting from Global Plus, especially when airlines are scaling back the number of flights. Our view is that it is better to come to us, obtain a lower floating rate and make real savings. For example: on our floating rate, which is 30 basis points lower than the banks, your savings will be $600 per year on a $200,000 mortgage. This is more than enough to purchase a return airfare to say Sydney at any time you want to go.

Thoughts On Next Year

This year, from our point of view has been divided into two halves. The first half of the year was reasonably slow but with some improvement in house sale volumes. The second half confirmed this, with house sales volumes continuing to improve, mortgage rates decreasing and a better rental market for landlords.

Our thoughts for next year include, * Continued good demand for housing on the back of low mortgage rates, positive migration figures and low unemployment. * Lower mortgage rates. Further cuts are expected at the short end of the curve, particularly in the floating rate area. * More mortgage products becoming available. These will be particularly aimed at those with impaired credit histories. We are currently working on such products.

Final Newsletter for the Year - Merry Christmas

The Emortgage newsletter is having a break. Our first newsletter started in February 1999 and has appeared fortnightly over the past three years. Our next newsletter will be on 8 February 2002. We would like to thank you for your continued support. We wish our readers, clients, introducers and supporters a very Merry Christmas and all the best for the New Year.

Our current mortgage interest rates are as follows

Variable rate 6.40%

No Financials Home Loan 7.40

Quick Start Home Loan 5.94 (new)

One-year fixed rate 6.26 (new)
Two-year fixed rate 6.82 (new)
Three-year fixed rate 7.38 (new)
Five-year fixed rate 7.81 (new)

Line of credit facility 6.75

Regards
William Cairns
James Lockie

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