Cairns Lockie Mortgage Commentary 28 July 2006
Cairns Lockie Mortgage Commentary
Issue 2006 / 13 28 July 2006
Welcome to the thirteenth 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 28 July 2006) the money markets were at the following levels:
Official cash rate
90 day bill rate 7.48 (up from 7.46)
1 year swap rate 7.49 (unchanged)
3 year swap rate 7.13 (down from 7.14)
10 year bond rate 5.90 (up from 5.88)
Kiwi dollar 0.6192 (up from 0.6184)
Council Valuations and E-Valuations Can Still be Useful
What is the value of that property, you are interested in buying? Your local real estate agent can tell you what similar sorts of houses in the area have sold for. The local council's website will give you the council valuation. In some instances these may be too old to be much use - in other cases they will be recent and you can work out a ratio of recent house sales to their council valuations. This may be a useful ratio for your intending purchase. For $31 you can get an e-valuation from Quotable Value at www.qv.co.nz. These valuations tell you, the various details about the property, comparable sales and a likely price range. These can be helpful and are inexpensive.
House Prices Continue to Rise, But More Slowly
Four weeks ago we provided an update on the recent trends in house prices for May. There has been a lot of interest in this topic so we thought another update useful. Ignoring the bad weather and the middle of winter, the national median house price firmed by nearly 2%, from $305,000 in May to $310,000 in June. The interesting aspect to the June figures according, to the Real Estate Institute, was that the Auckland market was firm with an increasing number of buyers and sellers emerging. The Auckland median price was up just over 1% for the month from $400,000 to $405,000. Our slightly higher annual inflation of nearly 4% will be eating into some of these gains.
Interest Rates to Remain High for Longer
Yesterday the Reserve Bank reviewed the Official Cash Rates (OCR) and decided on the status quo - there was no change. It did comment that inflation was an issue as it was outside the 1-3% band, at nearly 4%. Recent economic developments including a slowing in retail sales and the depreciation of the currency are in line with the bank's expectations. This is positive news for those with mortgages, as rates have most likely peaked. Borrowers will still see fix rates jumping around a bit in the range of 10 -20 basis points depending on what is happening in the money markets. Floating rates are not expected to start to ease until well into 2007.
General Finance's New Prospectus
General Finance Limited, a fully owned subsidiary of Cairns Lockie Limited, has released its third prospectus, containing our result to 31 March 2006. We are currently offering some attractive rates, such as 9.99% for two years. All deposits are debenture secured. General Finance lends for shorter terms; in particular for bridging type proposals. All lending is secured by first or second mortgages over residential property. The company does not lend in the consumer finance area or on cars. If you are thinking of investing some funds on fixed deposit please do not hesitate to contact us. We would be happy to send you 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 8.00
One-year fixed rate 8.58
Two-year fixed rate 8.23
Three-year fixed rate 8.23
Five-year fixed rate 7.94
Line of credit facility 9.30