Cairns Lockie Mortgage Commentary
Cairns Lockie Mortgage Commentary
Issue 2009 / 22 4 December 2009
Welcome to the twenty-second and final 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 http://www.emortgage.co.nz/newsletters.htm
The Money Market
This morning (8am on 4 December 2009) the money markets were at the following levels:
Official cash rate 2.50% (unchanged)
90 day bill rate 2.78 (unchanged)
1 year swap rate 3.38 (up from 3.35)
3 year swap rate 4.87 (down from 4.95)
10 year bond rate 5.91 (down from 5.95)
Kiwi dollar 0.7273 (down from 0.7380)
2010 Crystal Ball
It is always difficult to predict the next twelve months but some trends are starting to emerge. We believe house prices, in the main centres, will continue to appreciate. This is both demand and supply driven. There are less new dwellings becoming available as there are fewer being built, and demand is increasing due to higher immigration figures, more Kiwis returning home and a natural population increase. Interest rates will go up but in the second part of the year only. The amount they go up all depends on the recovery happening, how strong it is and unemployment starting to fall. Finance will be difficult to obtain for business and construction projects due to the demise of virtually all second tier lenders. This is a serious issue for the country and will hinder our future growth. Each month the international credit crisis moves further into the background and hopefully next year it can be consigned to part of global economic history.
More on Home Insulation
The Government home insulation scheme is proving to be popular. During its first four months 19,759 homes have taken advantage of the scheme. The target for the full year was 27,000 homes and this will easily be exceeded. The Government has announced it will be making the scheme more flexible to encourage more homeowners to utilise it. Landlords have also been using the programme which is positive. Some people, over the winter months, have complained there is a waiting period to get this work done. Now is the time to get it done - it does not matter if you have wait a couple of months as we head towards summer - then homeowners will be prepared for the coming winter.
Building Consents Rise
The number of residential building consents being approved has started to increase. So far this year (until the end of October) 12,311 building consents have been approved - this is down on the 17,753 last year and well down on 2007 at 23,296. To match current demand with our increasing population, we need to build around 17-18,000 dwellings each year. The increase in the past few months is significant as developers will only take on projects if they believe that the economy is improving. Residential construction is a big employer, not only for those working on the property, but downstream as well - that is the various suppliers, real estate agents and lawyers. This is good for the economy, and while we are not bold enough to say that the recession is over, this is a positive development.
Interest Rates across the Tasman
Earlier this week the Governor of the Reserve Bank of Australia increased their overnight cash rate from 3.50% to 3.75%. This is now well above our rate of 2.50%. The reasons for the third increase in so many months are that mining activity is picking up, the economy is improving and the country is coming out of recession. The immediate response is that floating rate mortgages, the most common type of mortgages in that country, have gone up. The next review will be in February and a number of commentators are saying that the rates may go up again. The consensus in New Zealand is that our rates will remain where they are until about June 2010. Much depends on how quickly our economy starts to improve.
As this is our last newsletter for the year, we wish everyone a Merry Christmas and a happy New Year. Our next newsletter will be on 12 February 2010.
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