Cairns Lockie Mortgage Commentary 30 June 2006
Cairns Lockie Mortgage Commentary
Issue 2006 / 11 30 June 2006
Welcome to the eleventh 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 http://www.emortgage.co.nz/newsletters.htm
The Money Market
This morning (8.00 am on 30 June 2006) the money markets were at the following levels:
Official cash rate
90 day bill rate 7.44 (down from 7.48)
1 year swap rate 7.40 (down from 7.42)
3 year swap rate 6.97 ( down from 6.98)
10 year bond rate 5.86 ( up from 5.82)
Kiwi dollar 0.6040 (down from 0.6226)
Latest figures are confirming that there is still life left in the housing market. Sales are strong but it is taking longer to sell, with it now taking 38 days on average to sell a dwelling across the country, compared with 34 days in April 2006. The range last year was 28 to 30 days. Thirty-eight days to sell is still below the ten year average which is just over 40 days. Over the past month house prices remained remarkably stable, with the median house price in May 2006 nationally $305,500, up very marginally on $305,000 in April 2006. It is fair to say that house prices are really starting to stabilise.
No Deposit - No Problem
There are a number of people on reasonable incomes who just cannot save a deposit and feel now is the right time to purchase their own home. Five years ago it was not possible to purchase a home without a deposit, but it is now. It you are in this position we are able to assist you with our 100% Home Loan. It works quite simply - we advance 95% of the purchase price under our prime rate product and provide a second mortgage for the remainder. The second mortgage is structured so it is easy to refinance when your property appreciates in value, merely adding to the first, or the second mortgage can just be repaid through your own cash flow. We look forward to assisting you.
Average Wealth Increases
As various financial commentators have noted, most of New Zealanders’ wealth is tied up in their own residential properties. It is estimated that we have just over $500 billion of our total wealth in our houses. This equates to roughly $345,100 per household. This has more than doubled over the past 10 years. There are several reasons why this is the case. New Zealanders seem to prefer assets that they can see and touch. Tax is another important consideration, driving investment in investment properties. From April next year, the Government is proposing a harsh capital gains tax on all offshore shares (except Australia), which will have the likely effect of reducing our investment in offshore shares and driving more people towards the security of property.
Issues with Family Trusts
More people are using family trusts to hold their property assets and other investments. Potential borrowers must realise that by using a family trust they are inserting another structure between themselves and their property. As a result, there is an increase in administration work. Lenders require loan approvals to be signed by all trustees, and at settlement, all trustees must sign the change in title and mortgage documents. If a trustee is not available, then this will hold up the transaction. If you think this may happen, it is wise to obtain a power of attorney to allow the documents to be signed on the trustees’ behalf. Your solicitor is the person to arrange this for you.
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 8.00
One-year fixed rate 8.43
Two-year fixed rate 7.98
Three-year fixed rate 8.03
Five-year fixed rate 7.89
Line of credit facility 9.30
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Cairns Lockie Limited is not a Registered Bank.