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Cairns Lockie Mortgage Commentary 9 Oct 2009

Cairns Lockie Mortgage Commentary

Issue 2009 / 18 9 October 2009

Welcome to the eighteenth fortnightly Cairns Lockie Mortgage Commentary for 2009. 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 (9am on 9 October 2009) the money markets were at the following levels:

Official cash rate 2.50% (unchanged)
90 day bill rate 2.77 (down from 2.78)
1 year swap rate 3.32 (up from 3.14)
3 year swap rate 4.90 (up from 4.73)
10 year bond rate 5.89 (down from 6.05)
Kiwi dollar 0.7400 (up from 0.7205)

Interest Rates Go Up in Australia

The Reserve Bank of Australia surprised the markets on Tuesday of this week by increasing the overnight cash rate by a quarter of a percent from 3.0% to 3.25%. They are the first central bank in the world to start tightening and increasing their rates. It has led to an increase in mortgage rates across the Tasman. With the Australian economy showing signs of improving, the RBA felt that it was prudent to gradually ease the current monetary stimulus. On a positive note, it should slow down our currency's appreciation against the Australian currency. Australia has higher wholesale rates than New Zealand, which is historically unusual. Their rate is 3.25% against our 2.5%. Due to the state of our economy our official cash rate is unlikely to go up until the middle of next year.

Property Managers Scams

Something that is becoming more of a problem and was discussed in last week’s NZ Herald by journalist Diana Clement are property management scams. We often hear of scams involving the buying and selling of properties, but this one involves fraudulent property managers. Basically it involves unsuspecting tenants handing money over to scammers posing as property managers and landlords. It is made easier for the scammers, when most of the transaction is done over the internet, people see the property online, do most of their talking with scammer online and they finally transfer their funds via this method as well. To protect yourself it is best to always view the property with the manager, and tend to the business side of the transaction at his or her office - never hand over cash and always get a receipt.

New Real Estate Code

A new real estate code of professional conduct and client care comes into effect from the 17 November this year. The essence of this new code is to promote greater disclosure of such things as the discounts agents may get from their suppliers. It aims to enhance transparency in the dealings between agents and their clients. It will establish an independent real estate agents authority which will oversee such things as agent licensing and complaint procedures. This body will have real teeth and has the ability to award compensation to the public of up to $100,000 if breaches do occur.

Daylight Saving and Australia

The general feeling is that daylight saving appears to begin too early and end a little too late. We could look at aligning ourselves with most of Australia. The Australian states with daylight saving (NSW, Victoria, South Australia and Tasmania) all start a week after us and end a week before us. We should surely follow their example. For those of us doing business with the most populous states of Australia, our lack of synchronisation of daylight saving is a real inconvenience. It is interesting that travellers, whether holiday makers or those going on business, make the same observation. We talk of greater harmonisation with Australia - let’s do it with daylight saving. It would appear it will make many Kiwis happier and, above all, it costs nothing.

Mortgage Interest Rates

For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender (below) or the Cairns Lockie Limited Loan Administration Department (below).

William Cairns
James Lockie


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