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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2005 / 13 29 July 2005

Welcome to the thirteenth 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 evening (4.30 pm on 28 July 2005) the money markets were at the following levels:

Official cash rate 6.75% (unchanged) 90 day bill rate 7.02 (down from 7.04) 1 year swap rate 6.96 (up from 6.95) 3 year swap rate 6.60 (up from 6.55) 10 year bond rate 5.75 (unchanged) Kiwi dollar 0.6796 (up from 0.6760)

Larger Credit Exposures for Our Clients

Over the past year we have added a new wholesale funder - so we now have two prime wholesalers to assist us in writing more mortgage business. We have also been able to increase individual exposures with each wholesaler, and as result we can advance more to each client.

Currently, we can look at individual exposures of just over $3.0 million. This should greatly benefit our existing clients who can now borrow more from us or those potential new borrowers for whom we can provide lending solutions which were previously unavailable.

Central Otago House Prices

We now have a new real estate region which includes all house sales in the Queenstown, Arrowtown and Wanaka districts. Previously these were included in the Otago or Southland sales figures. The creation of this new twelfth region is important as it happens to have a median sales price of $395,000 which is the highest for New Zealand.

Auckland is next at $366,500 and then Wellington at $300,000. Otago and Southland are $197,000 and $128,000 respectively. The median for the whole of New Zealand is $284,500. What is also interesting is this new area is growing fast and a number of expensive dwellings are being built.

Lifestyle Blocks Continue in Popularity

Lifestyle blocks, most of which are less than 10 hectares, combine the advantages of living in the country with the job and career advantages of the city and are continuing to prove popular. The median selling price for lifestyle properties nationwide was $355,000 for June compared with $345,000 in May.

A year ago the median price was $285,000. Total sales in June were 593, compared with 698 in May and 645 in the year before. According to agents, there is a continued strong demand for these types of properties. Lifestyle blocks are not just found outside the major cities but are also located around towns such as Palmerston North, Napier and Hastings.

Mortgage rates again

The Reserve Bank reviewed the Official Cash Rate (OCR) today and there was no change. The OCR remained at 6.75%. The RBNZ's main concern is now inflation and the risk that it may breach that crucial 3% threshold at some stage during the year. As a result there is little scope for any rate decreases in the near future.

Our view is that interest rates have peaked but mortgage rates will stay at the current levels for the remainder of the year. The RBNZ noted that economic growth is slowing but the housing market remains firm.

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 7.74 Three-year fixed rate 7.54 Five-year fixed rate 7.44

Line of credit facility 8.75


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