Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2000/3 25 February 2000

Welcome to the third issue of the Cairns Lockie Mortgage Commentary for 2000. 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 (8.00 am on 25 February) the money markets were at the following levels:

Official cash rate 5.25% 90 day bill rate 6.01 1 year swap rate 6.94 3 year swap rate 7.63 10 year bond rate 7.92 Kiwi dollar 0.4865

Drop in New Dwelling Units (New Construction)

According to the latest housing statistics, the number of new residential dwellings authorised for construction for January is down on previous months. This implies the new construction in this sector is slowing down. The number of new dwelling units authorised for construction in January was 1492, the lowest monthly total since October 1998. According to Statistics New Zealand this is a continuation of a six monthly declining trend.

The majority of the approvals were in the Auckland area. Some regionally areas were well down. In Christchurch 63 new dwelling consents were issued, Wellington 41 and Nelson only 2. Once a new building consent is issued, building must commence within six months.

Mortgage Scene in Australia

Part of our business is assisting New Zealanders working offshore (particularly in Australia), overseas investors and potential residents purchasing properties in New Zealand. We also have a number of clients who own residential properties in Australia. We are often asked what is happening with mortgage rates in that country. Australian mortgage rates are similar to rates in here although there is greater variation between the lending institutions. Floating rates range from between 6.60% to 7.30%. The non-banks tend to be at the lower end and the banks such as ANZ and Westpac are at 7.30%. The three-year fixed rates range from around 7.70% to 8.45%. Our floating rates range from 7.10% to 7.60% and three-year rates from 8.75%-9.10%. Mortgage rates have been increasing over the past six months in similar fashion to what we have seen in New Zealand.

What Our Competitors are Doing

We have had a few queries as to how our product compares with the newly introduced ASB Economiser.

The Economiser product from the ASB Bank while priced at 7.10%, comes with a set 1.0% approval fee, a $10 monthly charge, compulsory ASB insurance (borrower protection or term life), and reduced flexibility in terms of split loans.

The Designer Home Loan from Cairns Lockie is priced at 7.15%, has lower application fees, no ongoing charges (monthly or annual), no compulsory insurance requirement, and has the ability to break the loan into as many as 4 splits (to benefit from a mix of variable and fixed rates).

The lesson here, for potential borrowers, is they must look beyond the rate and consider all aspects of the product.

Our current interest rates are as follows

Variable rate 7.15% Two-year fixed rate 8.45 Three-year fixed rate 8.75 Five-year fixed rate 9.15 Line of credit facility 7.50

Regards William Cairns James Lockie

Cairns Lockie Limited PO Box 74-212, Market Road, Auckland Telephone (09) 525 9711 Facsimile (09) 579 7795 Website http://www.emortgage.co.nz Email mailto:wcairns@emortgage.co.nz mailto:jlockie@emortgage.co.nz mailto:gslade@emortgage.co.nz mailto:sgasson@emortgage.co.nz mailto:pblain@emortgage.co.nz

If you know anyone who may find this newsletter useful we would be happy for you to forward it on.

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