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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2003/16 5 September 2003

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

The Money Market

This morning (8am on 5 September 2003) the money markets were at the following levels:

Official cash rate 5.00% (unchanged)

90 day bill rate 5.15 (up from 5.12)

1 year swap rate 5.40 (up from 5.32)

3 year swap rate 6.04 (up from 5.89)

10 year bond rate 6.12 (up from 5.93)

Kiwi dollar 0.5690 (down from 0.5850)

Australians Buying Up Large in NZ

During 1997 - 1999, 72% of commercial property sold in this country was purchased by locals, with Asians at 11% and Australians at 7%. During the 2000 - 2003 period the percentage of commercial property bought by the locals had dropped to 58%, whereas Australians had increased to 22% and the third group were Europeans at 7%. So the biggest foreign group who are known to us all, are our cousins from across the ditch. Australians favour New Zealand with our similar laws, lack of capital gains and stamp duty taxes and they have money to spend as a result of their compulsory superannuation.

Better Deal for Landlords Coming

One of the big issues concerning residential property investors when letting their properties to various groups of beneficiaries is whether they will get their rent paid and on time. The obvious solution is to get Work and Income to deduct the rent from the benefit and pay it directly to the landlord. Landlords have been asking for this for a long time now. The Government at long last is making some positive noises in this area. This is logical and the benefit that landlords will be increasingly happy at letting their properties to this market segment who are the most dependent on renting. It may well increase the supply of housing to this sector and it also gives the tenant peace of mind that their rental is being paid and on time. Lets hope this reform occurs.

Housing Consents Running Hot

Housing consents (the approval to go ahead and built a new dwelling) are riding at an all time high. New housing consents of 2,621 for the month of July were the highest since records began in 1990. The average for May and June was close to 2,500 per month and from January this year to April they averaged 2,200. Consents were spread right across the country rather than just in Auckland and Wellington. People are considering building as opposed to buying an existing dwelling due to the current shortages of stock, and property developers are continuing to be active in the market.

There Must be Money in Churches

Recently in Northland, (a Wellington inner city suburb) an unusual property sold. It was the old St Anne's Anglican church which sold for $830,000 - nearly twice its rateable value. The church which had been deconsecrated in 1999, had been converted into a three bedroom dwelling. Interestingly, this would be one of the larger sales transactions in Northland where the average price of a dwelling in the combined Northland / Kelburn area according to Valuation NZ is $440,000.

Our current mortgage interest rates are as follows

Variable rate 6.75%

No Financials Home Loan 7.75

Jumbo Loan 6.75

Quick Start Home Loan 6.30 (new)

One-year fixed rate 6.61 (new)

Two-year fixed rate 6.87

Three-year fixed rate 7.09

Five-year fixed rate 7.36

Line of credit facility 6.85

Regards William Cairns James Lockie

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