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Cairns Lockie Mortgage Commentary 17 May

Cairns Lockie Mortgage Commentary 17 May

Cairns Lockie Mortgage Commentary

Issue 2002/8 17 May 2002

Welcome to the eighth Cairns Lockie Mortgage Commentary for 2002. 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

The Money Market

This morning (9am on 17 May 2002) the money markets were at the following levels:

Official cash rate 5.50% (up from 5.25%)

90 day bill rate 5.87 (up from 5.78)

1 year swap rate 6.58 (up from 6.46)

3 year swap rate 7.07 (up from 6.98)

10 year bond rate 6.87 (up from 6.79)

Kiwi dollar 0.4610 (up from 0.4450)

Good News for Property Investors

The previous twelve months has seen an increase in residential rentals in a number of areas. According to a recent survey by the Residential Property Investor Magazine, there were ten areas were average rentals increased by between 7.5% and 14.9%. Seven of the ten areas were in Auckland and the other three areas were all in the South Island. They were Merivale/Ilam/Fendalton in Christchurch, Timaru and Invercargill. The reasons noted are increasing polytech student numbers in Invercargill, better employment prospects in Timaru and more people moving to Christchurch. Rentals remain soft in provincial areas in the lower part of the North Island.

Kiwibank Gets a Dose of Reality

While we remain a strong critic of Kiwibank, we will highlight any good points we observe. Kiwibank notes that they are rejecting somewhere between 30 - 50% of all mortgage applications. This is sensible, as many in the market feared that all those borrowers who did not meet banking or non banking lending criteria would go to Kiwibank. The result would be a larger than expected loss making entity with an inferior credit book. The recently released KPMG Financial Institutions Performance Survey shows that a major key to robust lending institutions is a tight credit policy. The KPMG report is comprehensive and in depth and can be obtained from any of their offices for $99.00 (or visit

Do You Have a Client, Colleague or Friend Like This?

Four defaults, several collections, two judgements, and a number of enquiries on their credit report. Unable to get bank or prime finance, yet their cashflow position has taken a turn for the better. We can now assist. Over the past six months we have been active in developing the non-conforming mortgage market. These products are designed to assist borrowers like those in the example above. They are targeted at those who have had one or two severe financial problems but who are now back on the right track. While the interest rate is more than for a prime product, the benefit for borrowers is the chance to start over again, with the option, in a couple of years, of refinancing onto a prime rate.

Marriage - Be Quick While It Is Still Fashionable

· There were 20,000 marriages registered in New Zealand during the December 2001 year. · The marriage rate per 1,000 not-married population aged 16 years and over, dropped from 15.6 in 2000 to 14.8 marriages per 1,000 in 2001. · The median ages for men and women marrying for the first time were 29.3 and 27.5 years respectively, in 2001. · There were 9,700 marriage dissolutions in the December 2001 year. · The median age at divorce was 41.9 years for men and 39.3 years for women in 2001. · The divorce rate remains stable at 12.3 divorces per 1,000 existing marriages.

Our current mortgage interest rates are as follows

Variable rate 7.10%

No Financials Home Loan 8.10

Quick Start Home Loan 7.45 (new)

One-year fixed rate 7.76 (new)

Two-year fixed rate 8.07 (new)

Three-year fixed rate 8.24

Five-year fixed rate 8.41

Line of credit facility 7.20

Regards William Cairns James Lockie

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