Cairns Lockie Mortgage Commentary

Issue 19 - 14 October 1999

Welcome to the nineteenth 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 http://www.emortgage.co.nz

The Money Market

This morning (8am on 14 October) the money markets are at the following levels:

Official cash rate 4.50%

90 day bill 5.05

1 year swap rate 6.00

3 year swap rate 7.28

10 year bond 7.15

Kiwi dollar 0.5075

A New Problem Emerging in the Mortgage Market - 'Fraud'

Often borrowers ask us (and other lenders) why we are so strict in requiring original salary or wage slips, original application forms and original copies of valuations. The simple answer is that there is fraud being committed by some individuals who are trying to obtain mortgage finance.

Over the past month we at Cairns Lockie have received three different applications for mortgage finance where the potential borrowers have fraudulently altered information in order to make their applications appear more favourable. The frauds have included

1) Altering a bank investment statement to show a savings record higher than it actually was. The different style of the typing was a major give away.

2) Incorrectly completed statements of position. Asked for the ownership confirmation of property allegedly shown in the statement of position, this was unable to be produced.

3) Falsely presented annual accounts. This was detected by routinely telephoning the Accountant concerned.

All the above frauds were poorly executed and easy to spot. We conclude that if we are seeing this amount of fraud then others lenders must be exposed to it as well. It is acknowledged that fraud is occurring at increasing frequency and we are aware it is operating on a much bigger scale across
the Tasman.

This does explain why lenders are paying stricter attention to detail.

Cairns Lockie Continues to Expand
At Cairns Lockie we are pleased at the amount of business we are receiving from outside of Auckland. Although we do not have any offices in other areas we do have dedicated staff looking after a number of regions outside Auckland. This is followed up with numerous visits to the areas concerned.

The Wellington region is looked after by both Glyn and William. Both of us have lived in the capital and know it well.

The Hawkes Bay is looked after by Scott. He has only recently moved to Auckland and looks forward to continue working with his business associates there.

The Waikato is being managed by Glyn.

An Interesting Article in the NZ Herald

In Monday's Herald (11 October) an interesting article appeared on investment returns from 1987 to 1997. It concluded that over that decade (which did include a lot of volatility in the investment markets and a recession as well as more buoyant times), the top performing investment class was res
idential property followed by bonds and other fixed interest investments.

Compared with investment returns over the longer term (1970-1997), it was interesting to note the top returning investment classes were shares followed by residential property.

It is easy to see why New Zealanders like residential property as their preferred investment choice.

Our current interest rates are as follows

Variable rate 5.85%

Two-year fixed rate 7.80

Three-year fixed rate 8.30

Five-year fixed rate 8.75

Line of credit facility 6.25

Equity accelerator 6.25

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