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Cairns Lockie Mortgage Commentary

Welcome to the sixteenth 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

The Money Market

This morning (8am on 3 September) the money markets are at the following levels:

Official cash rate 4.50%
90 day bill 5.00
1 year swap rate 5.87
3 year swap rate 7.26
10 year bond 7.00
Kiwi dollar 0.5193

Bank Branches- The Rapid Decline
For years banking commentators have been saying that New Zealand is over banked. Is this true? Every year since 1990 we have been reading in the newspapers about bank branch closures. Last year alone there were over one hundred bank branches closed. Many of us live in small towns or suburbs wh
ere only a few years ago there were two or three bank branches and now there are none. According to a recent banking and finance report by KPMG, Chartered Accountants, as a country, we are not over banked. We have 2.9 bank branches per ten thousand people. This compares unfavourably with the f
ollowing countries:

Australia 3.3
Canada 5.4
Japan 6.0
United Kingdom 7.1
Italy 7.3
Germany 8.1

The USA is slightly lower than New Zealand at 2.7.

Technology improvements are partially responsible for the decline in the number of branches. The days of having a local bank branch nearby, where all the staff knows you, are ending fairly quickly.

A New Trend in Inner City Housing
In the early 1990's there was a trend towards inner city living. Developers initially converted older commercial properties into apartments. Following this, purpose built apartments have been developed. The newest trend, which is occurring particularly on the inner city fringes, is the move to
wards terrace houses. The favoured locations in Auckland, to date, have been Parnell, Ponsonby and Mt Eden. Similar trends are expected to follow particularly in Wellington and Christchurch.

In the middle and higher price ranges, the market for terrace houses is similar to that for inner city apartments. At the lower end (with prices from $200,000) we are seeing considerable interest from first home buyers. The advantages of these types of developments are that they are giving New
Zealanders an increasing choice in the accommodation they may want to purchase.

Mortgage Interest Rates - Where Are They Going?
Last week we saw further increases in mortgage interest rates. All the increases have occurred at the longer end of the yield curve. Three and five year rates have gone up, but floating rates have remained unchanged. In NZ we now have a positive yield curve where longer dated fixed rates remai
n considerable higher than the floating rates. This is the normal situation. This is how mortgage interest rates are priced in most countries which operate relatively free capital markets. In Australia, which has had a positive yield curve for a number of years, the majority of mortgages are n
ow written at floating rates.

We Welcome a New Staff Member

Welcome to Scott Gasson who joined our team this week as a Residential Lending Representative. Scott comes to us with a long background in residential lending with ANZ, Sovereign and Ergo. He may be contacted at

Web Site Statistics
The number of visitors to our site, in the month of August grew 20% over the previous month, with page views growing 22%. We attribute this growth to the upgrading of our mortgage calculator, which is now our most popular page. For those of you who have not checked it out yet, it can be found a

If you wish, you can save the calculator (file menu: save as) and use it offline.

Our current interest rates are as follows

Variable rate 5.85%
Two-year fixed rate 7.60
Three-year fixed rate 7.95
Five-year fixed rate 8.50
Line of credit facility 6.25
Equity accelerator 6.25

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