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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2002/19 18 October 2002

Welcome to the nineteenth 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 (8 am on 18 October 2002) the money markets were at the following levels:

Official cash rate 5.75% (unchanged)
90 day bill rate 5.91 (up from 5.87)
1 year swap rate 5.98 (up from 5.87)
3 year swap rate 6.37 (up from 6.20)
10 year bond rate 6.46 (up from 6.15)
Kiwi dollar 0.4810 (up from 0.4775)

No Financials Home Loans - Now to 80%

Our flag ship product, the No Financials Home Loan, has been particularly popular, but has maxed out at an LVR of 76%. Until now, that is. Today we have increased the lending limits for the No Financials Home Loan to 80% of the value of the property, up to $500,000. In addition we have dropped the $100,000 net asset requirement. This product is aimed at the self-employed person and relies on them self-certifying their income. It has all the bells and whistles such as interest only, a redraw facility, and fixed rates. It is enables the self-employed, who have always found it more difficult and time consuming to borrow money, to do so now in a quick and efficient manner.

New Product Release -Jumbo Loan

Our second new product is targeting the higher net worth individual. We have now released our Jumbo mortgage, catering for those looking for a mortgage of between $500,000 - $750,000 secured over a single property. Again it has full product features with redraw and the like. We can split your mortgage into different tranches allowing the tax deductible parts of your mortgage to be kept separate. We have in-house knowledge on trusts so we can discuss structuring issues with you as well.

Inflation Contained

Our inflation for the September quarter was 0.5%, the lowest quarter for the past eighteen months. For the last twelve months the rate was 2.6%. For the next twelve months it is expected to be around 2%. This is despite strong housing and rental markets, some price increases in electricity, local body rates, health and alcohol items. Inflation seems well under control. The benefit for borrowers is that, mortgages rates will continue to be low (around 6.5 - 7.5%) and equally importantly, stable.

On the Verge of a Surge

The ASB Bank's recent quarterly housing confidence survey says we could be on the verge of another surge in house prices. Why are house prices expected to rise? Immigration is important in Auckland but not so much in other regions. Relatively low and stable mortgage rates are an important factor in people's house purchase decisions. The economy is expected to remain robust, unemployment may decrease to under 5% for the first time since the late 1980's and retail spending remain strong. The threat of world terrorism is like to keep more New Zealanders at home and spending money here and encourage foreign tourists to visit.

Our current mortgage interest rates are as follows

Variable rate 7.50%

No Financials Home Loan 8.50

Quick Start Home Loan 6.75

One-year fixed rate 7.06
Two-year fixed rate 7.27 (new)
Three-year fixed rate 7.44 (new)
Five-year fixed rate 7.66

Line of credit facility 7.60

Regards William Cairns James Lockie

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