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Cairns Lockie Mortgage Commentary 23 Nov 07

Cairns Lockie Mortgage Commentary

Issue 2007 / 21 23 November 2007

Welcome to the twenty-first fortnightly Cairns Lockie Mortgage Commentary for 2007. We aim to keep you informed on developments at Cairns Lockie, Home Loans and the mortgage market in general. Previous issues of this commentary can be found on our website

The Money Market

This morning (4 pm on 22 November 2007) the money markets were at the following levels:

Official cash rate 8.25% (unchanged) 90 day bill rate 8.71 (down from 8.73) 1 year swap rate 8.76 (down from 8.81) 3 year swap rate 8.39 (down from 8.49) 10 year bond rate 6.23 (down from 6.47) Kiwi dollar 0.7515 (down from 0.7732)

House Prices Holding Up

The current real estate figures are indicating that fewer houses are being sold and they are taking longer to sell. This does not necessarily mean that we will see house prices drop despite our ongoing high mortgage rates. There are several factors, in the short term, supporting houses prices remaining where they are.

The supply of new dwellings is expected to drop due to changes within the finance company sector.

The traditional market for finance company lending has been the developing of apartments, funding sections for subdivisions and new house construction. Finance companies have slowed their lending right down, tightened up on criteria and as result they will be funding fewer new dwellings.

The reduction in the supply of stock, removes an important variable that could have a downward impact on house prices. Unemployment is likely to continue to be low, next year is an election year, taxation cuts may be coming, and there is inflationary pressure in the economy. There are still a number of factors that are positive for housing.

House Prices – Up North

According to recent valuations from the Rodney Council (north of Auckland) such areas as Warkworth, Silverdale and Muritai beach have show strong increases over the past 3 years. The average growth was 36% but there were wide variations: Silverdale rose 61%; Helensville 51% and Warkworth 35%. The Rodney area is growing rapidly and is popular for those with lifestyle blocks.

It is still handy for those working on Auckland’s North Shore or Albany areas. The popularity of the area is likely to further increase when the northern motorway extension through to Puhoi is completed which will speed up traffic times (and avoid Orewa).

Wellington Council Valuations

This week and next, those living in Wellington will receive their annual council valuations. Most territorial authorities throughout the country complete their valuations on a three yearly cycle but Wellington completes theirs on an annual basis.

The valuations have increased on last year with the average house going up by 12.9% to $554,000. The increases were across the board including commercial, apartments and bare land. It is interesting to note that there are 71,854 types of property in the Wellington region with a total value of $48.99 billion. If property owners are unhappy with their valuations they have to 19 December to file their objections with the council.

Asset Lend 70 Mortgage

We have recently introduced an Asset Lend 70 mortgage. Under this lo doc product we are happy to lend up to 70% of the value of the property based on an income declaration that the borrowers can afford the mortgage.

It is ideal for those with plenty of equity but finding it difficult to confirm their income, with multiple sources of irregular income, the self employed or those who may be based offshore. Our Asset Lend 70 mortgage has all our usual features, can be paid weekly, fortnightly or monthly, full redraw or come and go features and can be transferred from one property to another. This mortgage type has a real place in our total offerings.

Our current mortgage interest rates are as follows:

Variable rate 10.20%

No Financials Home Loan 10.80

Jumbo Loan 10.20

One-year fixed rate 10.08 Two-year fixed rate 9.64 Three-year fixed rate 9.44 Five-year fixed rate 9.49

Line of credit facility 10.30

Regards William Cairns James Lockie


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