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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2005 / 23 16 December 2005

Welcome to the twenty-third and last 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 morning (8am on 16 December 2005) the money markets were at the following levels:

Official cash rate 7.25% (up from 7.00) 90 day bill rate 7.64 (up from 7.68) 1 year swap rate 7.53 (down from 7.63) 3 year swap rate 7.02 (down from 7.27) 10 year bond rate 5.84 (down from 5.86) Kiwi dollar 0.6946 (down from 0.7040)

Now We Are Seven

This year has been an active one for us at Cairns Lockie. We have continued to grow strongly. Some of our highlights for the year have included:

" Enhancements to our popular "No Financials" mortgage product aimed at the self employed person. We have increased our single property exposure to $1.0 million, and to $5.0 million over multiple properties. We have also made it much easier for the self employed to use this product to build an investment property portfolio.

" Being active in the deposit taking market for our subsidiary company General Finance. We are receiving a regular flow of funds which we thank our investors for.

" Introducing short term bridging finance, ideally suited to those who have bought a property but have not yet sold their existing one. We have also enhanced the range of second mortgages on offer. "

Widening the parameters of our standard mortgages so that we can say "Yes" to an increasing range of borrowers. For example we are making it easier to lend to those who own a number of properties or those that live permanently overseas.

Our 2006 Crystal Ball

It is always difficult to make predictions but a number of trends are beginning to emerge. We continue to have a robust economy with low unemployment so there will be a continued demand for first home buyers to purchase their own properties despite the higher interest rates. These higher rates together with lower immigration are starting to slow down the demand for investment properties. In most cases the rental return is well below the prevailing interest rates, and the likelihood of capital gains is less over the coming 12 months. Higher interest rates will have a negative impact on our business and exporting sectors rather than the intended housing sector. We are starting to see firms laying off employees particularly due to the high dollar. We do see a continued demand for well located properties in attractive suburbs.

Aussies Moving In On NZ property

A interesting group of investors from whom we are receiving enquires, is Australians purchasing rental properties in this country. They appear to be being driven by the fact that property is cheaper here and the yields are better. No stamp duty and no capital gains are also an attraction. The Australians are most interested in Auckland followed by the more popular holiday destinations. From a lending point of view we treat Australians the same as New Zealand borrowers. We welcome enquires from Australians wanting to purchase here.

Deposit Rates

We are currently looking for funds for our finance company General Finance Limited. These funds are used to provide for first and second mortgages secured over residential real estate. These funds are secured by first ranking debenture stock. Our flagship rate is 9.99% for a two year term with interest paid quarterly. Other terms are offered. Our minimum investment is $5,000. If you wish to invest please contact us on 526 7801 or go to http://www.general.co.nz/prospectus.htm for a prospectus and investment statement.

This is our last newsletter for the year. We have trust that you have found them useful. We would like to wish our subscribers, introducers, investors and clients a very Merry Christmas and all the best for 2006. Our first newsletter for the New Year will be on 10 February 2006.

Our current mortgage interest rates are as follows:

Variable rate 9.20%

No Financials Home Loan 9.80

Jumbo Loan 9.20

Quick Start Home Loan 8.20

One-year fixed rate 8.63 Two-year fixed rate 8.34 Three-year fixed rate 8.14 Five-year fixed rate 8.04

Line of credit facility 9.30

ENDS

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