Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

10 December 2004

Welcome to the twenty-third and final 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 http://www.emortgage.co.nz/newsletters.htm

The Money Market

This morning (8am on 10 Dec 2004) the money markets were at the following levels:

Official cash rate 6.50% (unchanged) 90 day bill rate 6.70 (down from 6.71) 1 year swap rate 6.66 (down from 6.70) 3 year swap rate 6.57 (down from 6.60) 10 year bond rate 5.97 (down from 6.00) Kiwi dollar 0.7130 (up from 0.7110)

And Now We Are Six

This year has been another active one for us at Cairns Lockie. We have continued to grow strongly. Amongst our highlights "
we have continued to push home ownership as a desirable aspiration, with our 100% No Deposit Home Loan proving popular. "
we have added another wholesale funder, Origin Mortgage Management Limited, which is a wholly owned subsidiary of the ANZ Bank. This has enabled us to increase our product offering. "
we are one of the few players in the market to offer a ten year interest-only mortgage which has proved popular with property investors.

" we have become a deposit taker in our own right, with General Finance Limited issuing a prospectus to raise secured retail deposit funds.

Our 2005 Crystal Ball

We believe that interest rates have now peaked but any decreases are unlikely to occur until late next year. Interest rates pretty well reflect the state of the economy. Currently we have a robust economy, low unemployment plus a strong currency. Any weakening of the economy will see lower interest rates after a lag period. We believe the housing market will be mixed over the coming year. There are a number of apartments currently being completed so we see some softening here, particularly in Auckland. Some residential landlords are telling us it is now getting harder to let their properties. This is due to more stock coming on to the market and lower immigration. We see a continued demand for well located owner occupied dwellings in prime suburbs as well as coastal properties.

Cannot Save a Deposit but Want a Home?

Over the past fifteen years and going against overseas trends, our home ownership rates has decreased from around 74% to the current level of 67%. Our 100% Home Loan is helping counter this trend. It is ideal for those in steady employment and want to commence home ownership but who are finding it increasingly more difficult to save that deposit. Commencing from this week we have increased our first mortgage limit from the current $300,000 to $400,000, as well as offering greater fixed rate choices. This should widen the appeal of this product.

Snakes and Ladders

The Reserve Bank has recently released a booklet called Snakes and Ladders, a guide to risk for savers and investors, written by the well known financial writer Mary Holm. This is a timely publication as there is a lot of discussion in the media about retirement savings. It covers the many facets on this subject. This can be a confusing area but Mary Holm has written it in a straight forward manner, in a form that is easy to comprehend. It is particularly relevant for those who have not yet started to save or those that have a savings plan underway. It takes a non-partisan approach and what's more there is no charge for this 48 page booklet. All you have to do is write to the Reserve Bank of New Zealand at P O Box 2498, Wellington or email them on info@rbnz.govt.nz

Deposit Rates

We are currently looking for funds for our finance company, General Finance Limited. These will be secured by first ranking debenture. Our top rate is 9.0% for a two year term. We do offer a range of terms from 6 months through to 5 years. Our minimum deposit is $5000. If you require an investment statement and/or a prospectus please do not hesitate to contact us.

This is our last newsletter for the year. We trust you have found them useful. We would like to wish our subscribers, introducers and clients a very Merry Christmas and all the best for 2005. Our first newsletter in the new year will be on 11 February 2005

Our current mortgage interest rates are as follows

Variable rate 8.40%

No Financials Home Loan 9.40

Jumbo Loan 8.40

Quick Start Home Loan 7.45

One-year fixed rate 7.76 Two-year fixed rate 7.77 Three-year fixed rate 7.79 Five-year fixed rate 7.76

Line of credit facility 8.50

Regards William Cairns James Lockie

ENDS

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