Cairns Lockie Mortgage Commentary
Issue 2002/12 12 July 2002
Welcome to the twelfth 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 evening (9 am on 12 July 2002) the money markets were at the following levels:
Official cash rate
5.75% (up from 5.50)
90 day bill rate 6.02 (up from 6.00)
1 year swap rate 6.24 (down from 6.32)
3 year swap rate 6.62 (down from 6.73)
10 year bond rate 6.53 (down from 6.57)
Kiwi dollar 0.4830 (down from 0.4910)
Our Core Mortgage Product is Still the BEST
The news over the past week is, that as a result of the Reserve Bank increasing the Official Cash Rate, all floating rate mortgages have increased. The trading banks have all increased their floating mortgage rates to 8.00%. We are increasing our floating rate to 7.60%, which is nearly half a percent under the banks' rate. This still offers extremely good value for our borrowers. You save $630 a year if you a $200,000 mortgage with us rather than with a trading bank. We do not charge any ongoing fees and it appears interest rates are about to peak. There is real value in having a home loan with us.
The housing market remains firm despite the recent mortgage rate increases. Each time mortgage rates rise the housing affordability index decreases. This has not been deterring home buyers. A recent survey by the ASB Bank shows that 54% of respondents still think it is a good time to buy a property. People in the South Island are even more optimistic. Our unemployment rate may even drop below 5% for the first time since the 1980's. Immigration is continuing and in certain prime areas there is a real shortage of the right type of housing. This bodes well for the housing sector.
We Like to Help
One of the delights in our work is assisting people who are having difficulty in obtaining mortgage finance. A recent example was a couple who was recent immigrants from South Africa. They had a reasonable deposit but because they were both self employed, with a short work history in this country, and no credit history, they were unable to obtain a mortgage. Through our 'No Financials' product we were able to assist them. Another case was a property investor who had a freehold house, but wanted a credit facility, so he could negotiate hard and acquire well priced properties by paying cash. We were able to assist through our line of credit product. Another case was an individual who wanted a short-term second mortgage for a business venture: again we were able to assist. We are continuing to offer more products and solutions to our increasing client base.
What is a LIM Report and Who Needs One
A Land Information Report, provided by your local council, can tell you a lot about a property you may be considering purchasing. Is it worth the $300 it costs? We think so. If the property has had building alterations the LIM will tell you whether they are permitted and whether a code compliance certificate has been issued. You may also learn whether there is potential erosion, flood or contamination issues, new or wider roads planned and a number of other details. Making a sale and purchase agreement conditional upon a satisfactory LIM can be good insurance.
Our current mortgage interest rates are as follows
Variable rate 7.60% (new)
No Financials Home Loan 8.60 (new)
Quick Start Home Loan 7.15 (new)
One-year fixed rate 7.46
Two-year fixed rate 7.72 (new)
Three-year fixed rate 7.84 (new)
Five-year fixed rate 8.01 (new)
Line of credit facility 7.70 (new)
Regards William Cairns James Lockie