Cairns Lockie Mortgage Commentary

Issue 2000/24 15 December 2000

Welcome to the twenty-fourth and final 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/newsletters.htm

The Money Market

This morning (9am on 15 December) the money markets were at the following levels:

Official cash rate 6.50% (unchanged from last fortnight) 90 day bill rate 6.75 (up from 6.66) 1 year swap rate 6.84 (unchanged) 3 year swap rate 6.72 (down from 7.04) 10 year bond rate 6.16 (down from 6.60) Kiwi dollar 0.4220 (up from 0.3998)

Economic Outlook Looking Rosy - It Must Be Christmas

Last week the Governor of the Reserve Bank, Don Brash, reviewed the Official Cash Rate and left it unchanged at 6.50%. At the same time he made a number of comments on the economy. These were favourable and next year looks considerably more positive than 2000. In summary he said: -Inflation will peak soon and the one-offs we have had this year such as petrol price rises and the increase in tobacco prices will wear off. - Business confidence is returning. - The lower dollar is helping our exporters. This is expected to continue. - Our trading partners are experiencing strong growth which is assisting our exporters. - Our current account deficit, which is high by international standards, is expected to decline (i.e. improve). - Unemployment is at a twelve year low. There are still people wanting to work, hence there is little likelihood of this feeding into inflation in the short term.

2000 - The Mortgage Market in Review

The mortgage market over the past decade has seen numerous changes. The last year was no exception. These changes have all been positive, particularly for the consumer. The changes have included - More competition. We have seen the establishment of the non-bank mortgage sector. These newer players have offered a variety of new products and competitive rates. - Product innovation. Several players have introduced highly attractive one-year fixed products. One lender has introduced loyalty points; others are offering discounts if you bundle all your financial requirements (credit card, mortgages and insurance). We expect further innovations, in this area, next year. - Internet banking. Some lenders are allowing internet access to account information and the ability to move funds in and out of your mortgage accounts. - More information. Several lenders are providing information to assist borrowers on how to save money on their mortgages, how to consolidate expensive debt and to be debt free in a shorter period of time. Cairns Lockie has been at the forefront of all of the above.

Regional Round Up -Wellington

This year we have seen a pretty flat housing market both in terms of price movement and sales volume. One exception to this appears to be Wellington. Although sales volumes are down (like the rest of the country), house prices in Wellington have increased by nearly 10% on average over the past twelve months. This was confirmed with the recent Wellington City Council rating valuations showing an average increase of 4.5%. The main areas of demand include the quality suburbs of Khandallah, Seatoun, Central Lower Hutt and Plimmerton.

The Emortgage Newsletter is Having A Christmas Break

This is the last newsletter for the year. We commenced writing them on 5 February 1999 and they have appeared fortnightly over the past two years. The first one for the New Year will be on 2 February 2001. We would like to thank you, for your continued support and wish our clients, readers and supporters a very Merry Christmas and all the best for the next year.

Our current mortgage interest rates are as follows

Variable rate 8.25%

Quick Start Home Loan 7.75 One-year fixed rate 8.05 (new) Two-year fixed rate 8.05 (new) Three-year fixed rate 8.05 (new) Five-year fixed rate 8.15 (new)

Line of credit facility 8.60

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:plange@emortgage.co.nz

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