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Cairns Lockie Mortgage Commentary - 19 May 2006

Cairns Lockie Mortgage Commentary

Issue 2006 / 8 19 May 2006

Welcome to the eighth fortnightly Cairns Lockie Mortgage Commentary for 2006, aiming 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 18 May 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged) 90 day bill rate 7.49 (down from 7.50) 1 year swap rate 7.38 (up from 7.32) 3 year swap rate 6.93 (down from 6.96) 10 year bond rate 5.87 (up from 5.82) Kiwi dollar 0.6223 (down from 0.6390)

Builder Licensing

In New Zealand, unlike Australia builders do not currently have to be licensed. This is about to change. From November 2007 optional builder licensing will be introduced and from November 2009 this will be compulsory. This is really bringing the building industry into line with the plumbing and electrical trades which have been registered for sometime. The regime will balance the need for using a licensed builder with our do-it-yourself culture. Minor work such as remodelling a bedroom or adding a deck can still be done by the home handyman. More substantive work will have to be done by a licensed builder. These changes have been driven, in part, by such things as the leaking building issues and other such incidents where standards have been compromised.

Petone has Some of the First Government Built Houses

It is commonly thought that the first state houses were built in Miramar in Wellington in the late 1930's. The first state houses were actually built in Petone in 1905, being commissioned by Richard Seddon's Liberal government. Twenty six houses were built and were let to lower income industrial workers. Today twenty-five of these houses still exist and are located in Patrick Street. A number of these houses have been renovated and are now worth between $350,000 and $500,000.

Market Slowing?

April was an interesting month in the residential real estate markets. According to the Real Estate Institute dwelling sales nationwide were 7,576, well down on the 10,094 in March 2006 and the 8,875 recorded in April 2005. This is largely due to this April having fewer business days, with both Easter and Anzac days being included. What is more interesting, despite all the negative comment on the housing market, is that the national median price actually rose to $305,000 up from $302,000 the month before and well up from the $272,000 from March 2005.

Business Finance at Prime Rates

We are noticing an increasing tendency for people using their own dwellings to obtain residential mortgage finance for the purpose of refinancing more expensive business loans or hire purchase agreements. If properly structured, this can save a business a lot with lower interest rates and can offer more flexible facilities. We are more than happy to provide mortgage advances for business purposes and in most cases these will be tax deductible. We generally offer our normal prime interest rates and we can split your loan into different tranches to separate your business loans from your personal borrowings.

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 7.89 Three-year fixed rate 7.84 Five-year fixed rate 7.84

Line of credit facility 9.30

Regards William Cairns James Lockie

Cairns Lockie Limited 321 Great South Road, Greenlane, Auckland PO Box 74-212, Market Road, Auckland


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