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Cairns Lockie Mortgage Commentary 21 April 2006

Cairns Lockie Mortgage Commentary

Issue 2006 / 6 21 April 2006

Welcome to the sixth 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 morning (8am on 21 April 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged)
90 day bill rate 7.48 (up from 7.47)
1 year swap rate 7.26 (up from 7.18)
3 year swap rate 6.72 (up from 6.63)
10 year bond rate 5.78 (up from 5.70)
Kiwi dollar 0.6335 (up from 0.6147)

Some Things are Better Here Than in Sydney

The New Zealand property market continues to be active. For example, during March it took 33 days, on average, to sell a residential property, compared with 37 days in February. For the Auckland area, the time required to sell was 34 days compared with 40 days in February (according to the Real Estate Institute). This compares most favourably with the 118 days on average to sell a house in Sydney. The market is Sydney is still sluggish. When the market peaked in 2003 the average difference between the vendors listing price and the final sale price was around 5% - now it is closer to 9%. Auction clearances remain low at around 54%, meaning that 1 out of 2 houses fail to sell.

House Prices Continue to Rise

According to figures released by the Real Estate Institute of New Zealand, March was a good month for residential property. Sales were 10,094 dwellings sold - well up on 7,930 in February. The median selling price was $302,000 - it first exceeded $300,000 in November 2005 and has been hovering around that figure ever since. Property has increased by 7.66% over the past year - the national median price increasing from $280,500 to $302,000. It is expected that price rises will continue to slow over the next 12 months. According to estate agents the property market remains active, throughout the country with good gains being noted in many of the provincial areas, such as the Hawkes Bay, Northland and the Manawatu.

Mortgage Rates in the UK

Home loan rates in the United Kingdom are considerably lower than ours. Floating rates range from 5.3% to around 6.0%, whereas the fixed rates are a little higher and range from 5.9% through to 6.5%. One of the features of the British market is the number of specials that enable borrowers to have a lower or honeymoon rate for an introductory period, often for 12 months. A honeymoon rate can be obtained as low as 4.6%, but with these loans you must stay with the lender for a certain period of time (ranging from 2 to 5 years) otherwise penalties will apply.

Second Mortgage Finance

A reminder - we do have funds available for second mortgages. Second mortgages are normally used for short term purposes. They are often used for additional finance to improve a property in order to sell it, or maybe for a deposit on a section or a rental property. One of the big features of these loans is that the interest can be capitalised for either the first 6 or 12 months. We welcome your enquires.

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

William Cairns
James Lockie


Cairns Lockie Limited is not a Registered Bank.

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