Cairns Lockie Mortgage Commentary newsletter
Cairns Lockie Mortgage Commentary
Issue 2002/18 4 October 2002
Welcome to the eigtheenth 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 (8 am on 4 October 2002) the money markets were at the following levels:
Official cash rate
90 day bill rate 5.87 (down from 5.88)
1 year swap rate 5.87 (down from 5.90)
3 year swap rate 6.20 (down from 6.22)
10 year bond rate 6.15 (unchanged)
Kiwi dollar 0.4775 (up from 0.4690)
The newly appointed Governor of the Reserve Bank, Dr Alan Bollard, after reviewing the macro performance of the economy, kept the Official Cash Rate unchanged at 5.75%. In the last quarter to June 2002 our growth rate was 1.7%, but year-on-year it is expected to be around 3.5%. The Governor was largely focussing on events overseas, which are not too positive. Overseas for the past six months there has been considerable turmoil in the sharemarkets, the recovery that was expected to occur, particularly in the USA, is taking longer than initially thought, and there has been an easing of commodity prices with the exception of oil. We see mortgage rates continuing to ease. (see below)
You are Never Too Old Get Into Your Own Home
We were delighted to hear that a mortgage lending company across the Tasman approved a mortgage for a 92 year old lady to purchase her first house, just north of Sydney. While we have not yet approved a mortgage for a 92 year old, we have assisted an 87 year old and an 85 year old. As long as a borrower has some equity and can afford to make the mortgage repayments we will lend to them. This also applies to residential investment properties. We look forward to receiving more mortgage applications from our mature borrowers.
Kiwibank's Throwing Money Away
We remain critical of Kiwibank with the Government actively competing in an already crowded banking market place. Kiwibank lost $10.2 million to the end of June. Imagine a Post Office employee going up to the roof of Parliament and throwing money out of the top window. If they threw out fists full of $10 notes, at the rate of 20 per minute for eight hours per day (with an hour off for lunch), five days a week, for the 23 weeks Kiwibank has been operating, they could not throw away as much money as Kiwibank has lost. We think this suggestion would bring more tangible benefits, particularly for those who picked up the $10 notes.
Buy New Zealand Made!
We are pleased to see that we are receiving mortgage applications from individuals who recognise us as one of the few NZ owned and operated mortgage lenders. All our lending is on NZ based properties and our funding is through the locally based wholesale capital markets. The four major banks, which account for around 90% of the market are all foreign owned. This means that a large percentage of their profits are remitted overseas and foreigners enjoy the benefits. The NZ owned and operated mortgage lenders include, the likes of us, building societies, PSIS and various credit unions. Sovereign used to be NZ owned, but was recently purchased by Australian interests.
Our current mortgage interest rates are as follows
Variable rate 7.50% (new)
No Financials Home Loan 8.50 (new)
Quick Start Home Loan 6.75 (new)
rate 7.06 (new)
Two-year fixed rate 7.37 (new)
Three-year fixed rate 7.54 (new)
Five-year fixed rate 7.66 (new)
Line of credit facility 7.60 (new)