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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2004/3 5 March 2004

Welcome to the third Cairns Lockie Mortgage Commentary for 2004. 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 5 March 2004) the money markets were at the following levels:

Official cash rate 5.25% (unchanged)

90 day bill rate 5.64 (up from 5.60)

1 year swap rate 5.85 (up from 5.76)

3 year swap rate 6.16 (up from 6.04)

10 year bond rate 5.91 (up from 5.88)

Kiwi dollar 0.6677 (down from 0.7010)

Cairns Lockie Telephone Numbers

A few callers still have our old number in their speed dials. We are now at 09 526 2000. Direct dial numbers for individual staff members are given at the end of this newsletter.

Sydney House Prices

There are various stories of properties selling in such Sydney suburbs as Mossman, Neutral Bay, and Vaucluse at quite extraordinarily high prices. But what is the difference in the median house prices of Auckland and Sydney. The median is the middle price and gives a more accurate reading than the average price which can be distorted by either very high or low prices. In the December quarter the median price in Sydney was $A500,000 or $NZ568,000. This was 81.47% higher than the median Auckland price of $313,000. So the difference remains quite pronounced.

Billions of Houses

We often read about the rising mortgage levels of New Zealanders. There are two sides to this story. If mortgage levels are rising then we have to consider what is happening to the other side of the ledger, house prices. If mortgage borrowing was rising rapidly and property prices were falling then this would be of some concern. Recent figures from the Westpac household savings indicators show that our housing stock, both owner occupied and rented increased by 20.7% in the past year to $234 billion. On the other side, mortgages totalled $94 billion. This equates to an average gearing of around 40%. This does make sense. Young home owners tend to be more highly geared whereas many of our retired people live in mortgage free homes.

Housing Consents Still Hot

This year to January 2004, 30,191 new dwelling consents were issued, the highest number since 1977. The level of consents is running at about 30% above the long term average. The increase in house building is occurring right throughout the country and is slightly skewed to apartment buildings. Consents are expected to return to closer to the long term average later this year as the effects of reduced immigration are felt and the high demand for new dwellings is met by the increased supply coming on stream.

New Life for the Old Whitcoulls Building

Many of those who live in Auckland or are regular visitors to the CDB will be aware of the rather elegant late-Victorian Whitcoulls building on the corner of Queen and Victoria Streets. This has been the flagship of the Auckland Whitcoulls and its predecessor for a number of years. What is less known is that the upper floor levels have been vacant for sometime. This is about to change. Approval has been granted to convert these floors into fifty-six apartments. The bookshop will be retained. These apartments will be real CBD inner city living located right in the heart of Queen Street.

Our current mortgage interest rates are as follows

Variable rate 7.15%

No Financials Home Loan 8.15

Jumbo Loan 7.15

Quick Start Home Loan 6.65

One-year fixed rate 6.96

Two-year fixed rate 7.22

Three-year fixed rate 7.34

Five-year fixed rate 7.46

Line of credit facility 7.25

Regards William Cairns James Lockie

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