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Cairns Lockie Mortgage Commentary

Welcome to the fifteenth issue of the Cairns Lockie Mortgage Commentary. This is a fortnightly electronic newsletter which aims 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 (and our second gnarly mortgage calculator at

The Money Market

This morning (8am on 20 August) the money markets are at the following levels:

Official cash rate 4.50%
90 day bill 4.75
1 year swap rate 5.53
3 year swap rate 7.08
10 year bond 6.93
Kiwi dollar 0.5295

Property Prices Bounce Back
According to Quotable Value New Zealand, most areas of the country have seen a firming in residential property values. Prices have, on average, increased by 2.7% in the six months to June 1999. This was after falling 3.7% in the six months to December 1998. The Wellington area has lead the inc
rease followed by Auckland. The worst performing areas were in the deep south, namely Dunedin and Invercargill. The house price changes for the six-month period to the end of June are detailed below:

Index % change
Porirua 6.5
Upper Hutt 6.1
Lower Hutt 4.3
Wellington 4.3
North Shore 4.0
Auckland 3.4
Franklin 3.4
Manakau 3.2
New Plymouth 2.5
Palmerston North 2.4
Waitakere 2.3
Whangarei 1.9
Nelson 1.7
Christchurch 1.7
Napier 1.6
Hamilton 0.8
Dunedin 0.8
Invercargill -0.8

House Sales Volumes Improve

House sales volumes are showing a large improvement on last year. Barfoot and Thompson have recently published their figures on housing sales confirming this trend. They show:

Sales July 1999 621 properties $179,920,759
Sales July 1998 437 properties $115,073,940

12 months to July 1999 7179 properties $2,050,205,085
12 months to July 1998 5639 properties $1,605,538,554

Fixed Rates Move
Over the past week all financial institutions have increased their fixed mortgage interest rates. The increases have been most marked for the longer dated rates, i.e. five-year fixed. These rates are now 1.0% higher than they were twelve months ago. At the other end, floating rates have remain
ed virtually unchanged over the same time period. Cairns Lockie Limited, over the last 6 months, has favoured the floating rate, when asked for rate recommendations by clients. If you have a larger mortgage and feel you must fix, we suggest you fix only part of it. We have seen many instances
of people fixing for long periods at higher rates only to see their circumstances change and then be faced with large penalties, to alter their banking arrangements.

Our current interest rates are as follows

Variable rate 5.85%

Two-year fixed rate 7.20
Three-year fixed rate 7.80
Five-year fixed rate 8.40

Line of credit facility 6.25
Equity accelerator 6.25

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