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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2005 / 9 7 June 2005

Welcome to the nineth Cairns Lockie Mortgage Commentary for 2005. 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 (8am on 7 June 2005) the money markets were at the
following levels:

Official cash rate 6.75% (unchanged)
90 day bill rate 7.03 (down from 7.04)
1 year swap rate 6.93 (down from 7.00)
3 year swap rate 6.58 (down from 6.71)
10 year bond rate 5.65 (down from 5.80)
Kiwi dollar 0.7089 (down from 0.7113)

Slightly Unusual Residential Security

At Cairns Lockie we continue to widen the bounds of what is acceptable
as residential security. While our lending criteria require the
borrower's security to be for the most part residential, it does not
exclude us from taking a residential security that has a slight
commercial aspect. Take for example a lifestyle block with a small
orchard or a packing shed. Similarly we can look at what is clearly a
residential property, but is being used as an accountant's or lawyer's
office. We can look also at a single dwelling holiday home that is being
let out to a number of short term occupiers throughout the year.

Mortgage Rates - Up Down or Sideways?

On Thursday 9 June the Governor of the Reserve Bank will review the
Official Cash Rate. Market consensus suggests that rates should not rise
for the following reasons:
- The unemployment rate rose from 3.6% in the December quarter to
3.9% at the end of the March quarter, indicating that the economy is
- New housing dwelling consents, particularly in the apartment
area, have fallen.
- Business confidence is easing. A recent National Bank survey
showed that around 62% of companies expect business conditions to
deteriorate over the next 12 months.
Who will be right on Thursday?

Mortgage Rates Across the Tasman

There are some difference between New Zealand and Australia - the most
obvious being that they have lower rates than we do, and unlike this
country most mortgages are written at floating rates. The spread of
rates within each pricing range is greater than here. New Zealand
mortgage rates from all lending institutions are closely lumped
together. Floating rates in Australia range from a low of 6.49% to
7.32%, (a spread of 83 basis points) and the two year fixed rates are
between 6.65% and 7.44%, (a spread of 79 points). On this side of the
Tasman floating rates range from around 8.60% to 9.00% (a 40 point
range) and the two year rates from 7.60% to 7.90% (a 30 point range). As
with New Zealand, the low rate offerings in Australia are provided by
non banks, such as companies like Cairns Lockie Limited, offering choice
to the borrower.

Apartments in Takapuna

Takapuna, on Auckland's North Shore, is becoming an alternative
destination for apartment buyers, who are attracted by the close
proximity to a lovely long beach, good shopping, and many restaurants. A
number of developments are underway - the Location Group is planning to
build 100 apartments; the Cornerstone group is about to build 117 and
the new Merge development has four retail levels planned as well as 100
apartments. Apartment living in Takapuna is not cheap - prices of these
new apartments will range from $500,000 to over $3.0 million.

Our current mortgage interest rates are as follows

Variable rate 8.65%

No Financials Home Loan 9.25

Jumbo Loan 8.65

Quick Start Home Loan 7.40

One-year fixed rate 7.83
Two-year fixed rate 7.79
Three-year fixed rate 7.64
Five-year fixed rate 7.64

Line of credit facility 8.75

William Cairns
James Lockie

Cairns Lockie Limited
321 Great South Road, Greenlane, Auckland
PO Box 74-212, Market Road, Auckland
Telephone (09) 526 2000
Facsimile (09) 579 7795


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