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Cairns Lockie Mortgage Commentary

Issue 2002/10 14 June 2002

Welcome to the tenth 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 http://www.emortgage.co.nz/newsletters.htm

The Money Market

This morning (9am on 14 June 2002) the money markets were at the following levels:
Official cash rate 5.50% (unchanged)
90 day bill rate 5.93 (up from 5.87)
1 year swap rate 6.48 (down from 6.56)
3 year swap rate 6.82 (down from 6.92)
10 year bond rate 6.62 (down from 6.74)
Kiwi dollar 0.4885 (up from 0.4772)

Politics and Interest Rates

One event that can really spook the financial markets is the mere hint of political instability or uncertainty. Since the announcement on Wednesday of an early election, (an unusual event on the NZ political landscape), the financial markets have remained remarkably stable. In fact, mid and longer dated fixed rates have eased around 10 basis points over the past two days. The exchange rate, another important barometer, has remained firm. What this is telling us, is that the market has been anticipating an early election, that there are likely to be few surprises during the campaign and there may be a degree of stability afterwards. This looks good for homeowners with floating rates likely to remain in the 7.35% to 8.25% range.

Millionaires' House Market Strong

An emerging sub sector of the housing market is the over million dollar sector. In Auckland this market represents 2% of homes sold by number or 7% of the market by value. This market is currently active. Over the past three months in Auckland there were 131 house sales in this sector. Most of the sales are taking place in Milford, Takapuna, Parnell and Remuera. However this market is just not confined to Auckland. In Wellington four properties have sold in the past three months in Seatoun for over a million dollars. Other parts of Wellington showing high house prices include Kelburn and Oriental Bay.

House Buyers are Disinterested in Rising Mortgage Rates

Despite three mortgage rate rises this year and the likelihood of a further one in July or August, buyers are continuing to purchase property. In Auckland in March 2002 there were 3,700 house sales. This was well up on 2,200 this time last year. The last time the Auckland market recorded 3,500 sales per month was in March 1996. Buyers are considering as normal, small ongoing increases and decreases in mortgage rates. Movements are in the range of 25 basis points rather than the 100 basis point range of 10 years ago. Other economic indicators remain favourable, with unemployment expected to fall further and retail sales currently firm.

Cairns Lockie Expands and Moves

This week has been busy for us. We have completed our fourth move in past three and half years. We are still in the Central Park complex but in a larger office to accommodate further growth. We are pleased to announce that Nikki Outshoorn has joined us as a Mortgage Officer and Estelle Carr as an Analyst. Nikki has held similar roles with Eloan and AMP Banking, and Estelle was formally an underwriter with Gemico Mortgage Insurance. Welcome.

Our current mortgage interest rates are as follows

Variable rate 7.35%

No Financials Home Loan 8.35

Quick Start Home Loan 7.40 (new)

One-year fixed rate 7.71 (new)
Two-year fixed rate 7.97 (new)
Three-year fixed rate 8.14 (new)
Five-year fixed rate 8.31 (new)

Line of credit facility 7.45

Regards William Cairns James Lockie

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