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Cairns Lockie Mortgage Commentary 15 July 2005

Cairns Lockie Mortgage Commentary

Issue 2005 / 12 15 July 2005

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

The Money Market

This evening (4.30 pm on 14 July 2005) the money markets were at the following levels:

Official cash rate 6.75% (unchanged) 90 day bill rate 7.04 (up from 7.03) 1 year swap rate 6.95 (down from 6.96) 3 year swap rate 6.55 (down from 6.59) 10 year bond rate 5.75 (up from 5.71) Kiwi dollar 0.6760 (down from 0.7010)

Super Jumbo No-Financials Home Loans

Last week the maximum exposure on our No-Financials Home Loan was just $800,000. This week we increased the per property limit to $1 million (up to a maximum of 80% of the property's value) and the aggregate exposure per borrower to $2.5 million.

This is a major enhancement reflecting our desire to write more of this sort of business and recognising that house prices have substantially increased over the past few years. This is an ideal product for the successful self-employed person who requires a home loan involving a large amount, with the minimum of hassles.

For the Smart Property Investor

We have also just released our "Smart investor" Home Loan aimed at the property investing public. Smart Investor consists of two separate loans: the home loan to cover the purchase or the refinance of an owner occupied property and an investment loan to cover the purchase or refinance of one or more investment properties.

All payments are then directed to repaying the home loan, on which in most cases the interest is not tax deductible, and the investment loan interest which is tax deductible, is capitalised until the home loan is repaid in full. This product has a number of features which including the rapid repayment of your own home loan, leaving you with tax deductible investment property mortgages. Our lenders are happy to discuss this product with you in more detail.

Next Interest Rate Review

The Official Cash Rate (OCR) is next being reviewed at the end of the month on Thursday 28th July. Any change in this rate will directly affect mortgage rates.

The market believes that the OCR will be left unchanged. The economy is slowing, the number of job vacancies being advertised has eased and immigration into the country is well off its highs of a few years ago. The only wild card is inflation which is affected by a falling currency. Overall it is strongly expected that the Official Cash Rate will remain unchanged and interest rates may have actually peaked.

Second and Bridging Mortgages

Our subsidiary company, General Finance Limited is receiving depositors' funds on a regular basis. This is pleasing and we appreciate the support from our investors. As a result of our steady supply of funds we are happy to look at a variety of second mortgage and bridging transactions. As these transactions are written on our own balance sheet we can give quick approvals and fast settlements. Try us, we would like to assist.

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 7.50

One-year fixed rate 7.93 Two-year fixed rate 7.89 Three-year fixed rate 7.54 Five-year fixed rate 7.44

Line of credit facility 8.75

Regards William Cairns James Lockie

ENDS

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