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Cairns Lockie Mortgage Commentary 22 September 06

Cairns Lockie Mortgage Commentary

Issue 2006 / 17 22 September 2006

Welcome to the seventeenth fortnightly Cairns Lockie Mortgage Commentary for 2006. We aim 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 (5.00 pm on 21 September 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged)
90 day bill rate 7.59 (up from 7.53)
1 year swap rate 7.66 (up from 7.56)
3 year swap rate 7.20 (up from 7.17)
10 year bond rate 5.75 (down from 5.89)
Kiwi dollar 0.6680 (up from 0.6472)

OCR and Mortgage Rates

Earlier this week the Reserve Bank reviewed the Official Cash Rate (OCR) and made no change. There have been no changes since December 2005. In previous statements the Governor suggested that rates would start to ease in 2007. This time he did not - saying that there were strong inflationary pressures that were taking longer to subdue and noted that any easing may not occur until 2008. We still believe that with the highest real interest rates in the western world, our rates have peaked. On the negative side there is unlikely to be any interest rate relief to those with mortgages for at least another twelve months.

Houses Prices Increase Worldwide

A number of commentators suggest that our house prices are rising too quickly and this may damage other more productive parts of the economy. In order to get a better picture we need to look at what our house prices are doing compared with the rest of the world. Recently the "Economist" magazine looked at this issue. Over the past year (calendar 2005) New Zealand was ranked 7th out of the 20 advanced countries in the survey, with an annual rise in house prices over the year of 12.4%. Denmark led the survey at a whopping 23.6%, whereas the USA, Australia and the UK were in the middle with house price rises of 10.1%, 6.4% and 6.1% respectively. Japan was at the bottom with actual house price fall of 3.9%.

Mortgage Seminars Going Well

We have commenced our spring mortgage broker series which are going well. These are open to all mortgage brokers and financial advisors, and are an excellent way to keep abreast of the ever increasing changes in the mortgage industry. So far we have completed our courses in Auckland and Tauranga but have others planned in a number of centres including, Hamilton, Wellington, Palmerston North and Christchurch. If you wish to attend please do not hesitate to contact us for the dates and venues. For members of the Mortgage Brokers Association you will earn two points towards your professional training by attending one of these seminars.

Interesting Website for Property Investors

There is an interesting website which we recommend viewing at which is aimed at those about to enter the residential property investment field as well as active and seasoned investors. The website is extensive and covers a range of topics, including discussing special regional markets, interest rates, and depreciation amongst other topics. The site is owned and operated by Philip Macalister's Tarawera Publishing Limited which is known for the popular "NZ Property Magazine" and also the "Good Returns" website at

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 8.15

One-year fixed rate 8.58
Two-year fixed rate 8.28
Three-year fixed rate 8.02
Five-year fixed rate 7.93

Line of credit facility 9.30

William Cairns
James Lockie




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