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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2003/5

Welcome to the fifth Cairns Lockie Mortgage Commentary for 2003. 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 4 April 2003) the money markets were at the following levels:

Official cash rate 5.75% (unchanged) 90 day bill rate 5.82 (down from 5.85) 1 year swap rate 5.60 (down from 5.74) 3 year swap rate 5.90 (down from 6.09) 10 year bond rate 6.01 (down from 5.14) Kiwi dollar 0.5480 (down from 0.5530)

10 Year Interest Only Mortgage Available Here

We are now offering a ten-year interest option to our standard mortgage. We are one of the few lending organisations offering this type of mortgage. You still apply for a twenty five year mortgage, but instead of being able to offer only five years of it, interest only, we can now offer ten years. The remaining fifteen years will be our standard table mortgage. This type of mortgage is ideal for property investors who wish to concentrate on building up their portfolio rather than making any capital repayments in the early years. Another group who will find it useful are those who believe they can get a higher return by putting their principal payments into various investment products including superannuation funds.

Drop in New Apartment Building Consents

During February the number of building consents was down on January (which was also down on December). For the last 12 months building consents were well up on the previous 12-month period. The main reason for the recent decrease is a decline in the number of Auckland apartment approvals. Some media commentators have described this as a crisis or a catastrophe but we are not so negative. We believe the market is pausing and responding in a positive manner. There has been tremendous growth in this sector. Back in 1990 there were fewer than three hundred apartments in the city. At the end of 2002 there were just under 7,000 and by the end of this year it is expected to be around 9,000. The 2004 figure is expected to be 11,000. The market can only absorb so many of these types of developments. To us it appears the market is purely adjusting to this growth and taking a pause.

100% Mortgage Going Well

A few months ago we introduced our 100% mortgage, whereby a buyer can fund the complete purchase of their first home. We recognised that there were a number of people who have good jobs but were unable to save a deposit for their home. This group includes recent immigrants, Kiwis returning from overseas and recently divorced people. This new mortgage is being well received. Most new borrowers are saying they want to get into a home sooner than later. They are concerned that if they wait a year to save up a deposit, house prices may have increased even further. This mortgage is good way to resolve all these issues.

Six Monthly Mortgage Statements

Every six months we send to all our mortgage clients a six monthly statement. They come out in October and April. For those such as property investors, whose mortgages may be tax deductible, these statements are important in preparing their returns. These statements will be posted out within the next fortnight. For those of you using our internet access facility, this information is available from our website at anytime.

Our current mortgage interest rates are as follows

Variable rate 7.50%

No Financials Home Loan 8.50

Jumbo Loan 7.50

Quick Start Home Loan 6.55 (new)

One-year fixed rate 6.86 (new) Two-year fixed rate 7.02 (new) Three-year fixed rate 7.19 (new) Five-year fixed rate 7.36 (new)

Line of credit facility 7.60

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