Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2000/5 24 March 2000

Welcome to the fifth 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 24 March) the money markets were at the following levels:

Official cash rate 5.75% 90 day bill rate 6.30 1 year swap rate 6.90 3 year swap rate 7.47 10 year bond rate 6.93 Kiwi dollar 0.4870

House Prices Firm

In our last newsletter, we reported that the housing sales volume in Auckland in January was down on December and that month was down on the previous December. February's figures show an Auckland sales volume of 2006 considerably up on January's figure of 1,592. There is more good news for Auckland home owners. The region's median price of $240,000 was the highest February for four years. Last February the median price was $235,000. Agents have been confirming that, there is more interest in the market now, compared with a month ago.

But Dwelling Permits Issued Continues to Decline

Statistics New Zealand estimates the number of dwellings authorised for construction in February 2000 has fallen to 1,607, the lowest February total since 1993. The largest fall was in Waitakere City. However Wellington, the Hutt Valley and Dunedin showed increases, bucking the trend.

More Information for Landlords

At Cairns Lockie we notice the lack of property market research, particularly when compared with the equity and bond markets. Andrew King, editor of the Residential Property Investor Magazine, is currently researching the residential property markets. He is looking at the median rental prices by area, housing type and vacancy rates. There is a brief questionnaire on his website, for completion by landlords who have let a property in the last month. Results will be collated and forwarded to all contributors on a regular basis, providing the most up-to-date information available on the market. The more who contribute, the greater the value of the information. This is a free service and participants will go into a draw to win a Property Management software package or a subscription to Andrew's magazine. For those who wish to participate, go to Andrew's website at http://www.propertyinvestor.co.nz and select "free e.rental stats".

Spend Your Own Savings

We are amused at the BNZ's latest gimmick: the Global Plus Home Loan, rewarding borrowers with Air Points. Those with a mortgage of $150,000 will earn 30,000 Air Points per annum, (equivalent to one economy return fare to Sydney). Ask yourself 1) Who wants just one ticket, what about spouses and children? 2) Do you need to pay to join Air Points? We understand the cost is $50. 3) What restrictions are there? Can you fly at anytime and on any airline? Or will the first available seat to Sydney, on the Air Points programme be in a fortnight? 4) At the end of the day who is paying? You! No wonder the BNZ was the first bank to put up their floating mortgage rate last week.

At Cairns Lockie, where our floating interest rate is currently nearly half a percent lower that most banks, you will save, $675 per year in cash, on a mortgage of $150,000. This will enable you to fly to Sydney at anytime, with no restrictions, with some money left over. Alternatively, if the saving of $675 per year is used to reduce your mortgage, a 25-year table mortgage will be reduced to 22.5 years. Why not decide, how to spend your savings, yourself?

Our current interest rates are as follows

Variable rate 7.15% Two-year fixed rate 8.65 Three-year fixed rate 8.75 Five-year fixed rate 8.90 Line of credit facility 7.50

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