Cairns Lockie Mortgage Commentary 7 April 2006
Cairns Lockie Mortgage Commentary
Issue 2006 / 5 7 April 2006
Welcome to the fifth 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 http://www.emortgage.co.nz/newsletters.htm
The Money Market
This morning (8am on 7 April 2006) the money markets were at the following levels:
Official cash rate
90 day bill rate 7.47 (up from 7.46)
1 year swap rate 7.18 (down from 7.25)
3 year swap rate 6.63 (down from 6.65)
10 year bond rate 5.70 (down from 5.77)
Kiwi dollar 0.6147 (down from 0.6250)
Record Month for the Cairns Lockie Group
A big thank you to all our referring brokers, introducers of business and our many clients. We settled a record volume of loans in March - our biggest month ever - up by almost 20% on our previous high. It would not have been possible without your support.
We are doing more because we can do more.
Part of the growth has been due to recent product changes, particularly the easing of criteria with our 100% Home Loan and improvements with our No Financials product. In some qualifying cases we have written second mortgages to top up No Financials loans beyond 80% LVR and $1 million per security. Being able to do bridging loans and second mortgages through our debenture funded finance company has increased the range of solutions we have been able to offer to our clients.
Over the past 12 months, the lifestyle market has enjoyed a period of strong growth, according to a recent report from Bayleys Research. A definition of a lifestyle block is a residential dwelling with upward of 10 hectares of land where the occupants have all the advantages of country living but maintain their city employment. The average sale price to December 2005 for this type of property reached a new high of $497,500 up by 20% from $414,500 the previous year. It currently takes 60 days to sell a lifestyle block, down slightly from 62 days in the 2004 year. Sales volume for 2005 was 7,990 units sold, virtually unchanged from the 2004 year of 8,017. These figures are assisted by a number of people purchasing vacant land and building a dwelling, thus adding to the supply of these types of properties.
Improvements to Our Construction Loan
We have recently enhanced our Construction Loan, by adding the option of using a second wholesaler. We can now advance up to 95% of the proposed construction including the land component, or up to 90% of the bare land. We have streamlined our progress payment procedures and these are now made to the builder directly, without the need for progress valuations in many cases. We will accept any professional builders to carry out the work. A fixed price contract is required, which is really there to protect the borrower. We do offer a No Financials Construction option, but here the amount we will lend is restricted to 80% of the valuation. For owner builders we can go up to 50% of the valuation, which is a first. Our new Construction Loan is more streamlined and user friendly to those wanting to build their new home.
New Zealand Rates Compared with Australia
A large number of Kiwis have properties in Australia, particularly in locations such as Queensland. The biggest difference between Australia and here, is that most mortgages there are written at the floating rate, which is little different from the fixed rates. The average bank floating rate is around 7.32% whereas a number of non-bank lenders are offering floating rates from 6.29% up to 7.32%. There are a number of specials on at the moment at around the mid 6.00's%. Three-year fixed rates range from 6.39% to 7.20%.
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 7.95
One-year fixed rate 8.38
Two-year fixed rate 7.74
Three-year fixed rate 7.69
Five-year fixed rate 7.64
Line of credit facility 9.30