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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2006 / 1 10 February 2006

Welcome to the first Cairns Lockie Mortgage Commentary for 2006. 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 (5pm on 9 February 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged)
90 day bill rate 7.62 (down from 7.64)
1 year swap rate 7.37 (down from 7.53)
3 year swap rate 6.80 (down from 7.02)
10 year bond rate 5.69 (down from 5.84)
Kiwi dollar 0.6763 (down from 0.6946)

Interest Rates and the OCR

The Reserve Bank reviewed the Official Cash Rate (OCR) in late January. To the relief of all home owners, with mortgages, the Governor did not increase rates. Reasons cited include the slowing economy with recent business confidence surveys confirming this, commencement of staff lay-offs, and the ever persistent risk that any increase in interest rates will increase our exchange rate and hurt our exporting companies. Inflation remains a risk, especially when a major input cost such as oil, continues to increase. Mortgage rates may have peaked, but it will be several months before we are likely to see any movements downwards.

100% No Deposit Home Loan

As houses continue to increase in price, it is becoming more difficult for first time purchasers to save the required deposit. As they approach their savings target, house prices continue to move away. A solution to this is our 100% Home Loan. We advance a 95% loan against the value of the property followed by a small second mortgage. Additional costs such as lenders mortgage insurance (if applicable), and fees can be capitalised, making the process easier on the borrower. The second mortgage is structured in such a way that it can be repaid quickly. We have been doing 100% Home Loans since 2003 and have helped a large number of people into their first home.

Lots of Annoying Small Loans

Many households have their mortgage, but over time have accumulated a number of other smaller loans, such as car hire purchase, furniture loans, credit card debt and maybe a bank overdraft. The problem with these types of loans is that they are at high interest rates and have to be repaid in short periods of time. This can cause cash flow pressures. One solution is to consolidate all these loans into your mortgage. In most cases you will at least halve your interest costs, as mortgage rates range around 8 - 9% compared with hire purchase rates of 16 - 20%. We can consolidate an unlimited number of loans within 90% LVR and at least three up to 95% LVR. With the increase in house prices over the past few years this consolidation process is a lot easier and quicker than you may think.

Investing with us

Our subsidiary company, General Finance Limited is taking retail investment deposits. Our flagship rate is 9.99% for 2 years with a minimum deposit of $5,000. Other terms ranging from 6 months through to 5 years are available at different, but competitive, rates. If you wish to invest please contact us on 09 526 7801 or go to for a prospectus and investment statement.

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 8.24
Three-year fixed rate 8.04
Five-year fixed rate 7.99

Line of credit facility 9.30

William Cairns
James Lockie


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