Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2003/22 28 November 2003

Welcome to the twenty-second Cairns Lockie Mortgage Commentary for 2003. 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 28 November 2003) the money markets were at the following levels:

Official cash rate 5.00% (unchanged) 90 day bill rate 5.42 (unchanged) 1 year swap rate 5.87 (up from 5.80) 3 year swap rate 6.46 (up from 6.45) 10 year bond rate 6.27 (up from 6.19) Kiwi dollar 0.6405 (up from 0.6295)

A Place for Professional Property Managers

Over the past few years a number of new property investors have entered the market. Home owners seeing a rise in the value of their homes are purchasing another property, and those saving for their retirement are purchasing one or two rental properties as a form of superannuation. Once you own a rental property you must manage them. This is often far more time consuming than first time investors imagine. Across the Tasman in New South Wales, over 85% of all rental properties are managed by professional property managers. In NZ we believe this figure is around 20%. If a property investor is finding it too time-consuming to manage their property, or the properties are in another town, then a full time property manager may be the answer.

Landlords Still Getting a Raw Deal

As more landlords enter the market, it is essential that the Tenancy Tribunal which has jurisdiction over tenancy / landlord issues functions effectively. However, it is still a one-sided affair. Last year there were around 45,000 applications to the Tribunal and 90% were made by landlords. Of these, 80% were for rent arrears. This is appalling. Tenants must be made aware of their obligations - rental payments just have to be paid no matter what. We have heard of delays in getting rent arrears hearings at the Tribunal. The Tenancy Tribunal must ensure that there are quick efficient methods in place to collect overdue rents, such as mandatory deductions from benefits, salaries and wages together with seizures of defaulting tenants' assets.

Our New Non-Confirming Mortgage to Assist the Self Employed

Over the past two years we have introduced a number of new mortgage products to assist those with impaired credit. Our latest offering is called "Business Equity Home Loan" which is aimed at the self employed, who may have had a few credit issues and may not be able to produce any financial accounts. To qualify the business person must be GST registered and have been in business for the last 12 months. Basically we use the last six months business bank statements to confirm the applicant's income. Once we have clarified the income we can then advance up to 90% of a residential or a residential investment property. We look forward to assisting you.

Kapiti Coast Popular

There remains continued interest in coastal property in a number of places around the country. This is certainly true on Wellington's Kapiti Coast. Recently a property that had originally belonged to a Lord Cobham, a former Governor General of this country, located in Rosetta Road, sold for $900,000, a whopping $360,000 over its recent council valuation. Again the property had what the market was wanting, beach access, all day sun and panoramic sea views.

Our current mortgage interest rates are as follows

Variable rate 6.75%

No Financials Home Loan 7.75

Jumbo Loan 6.75

Quick Start Home Loan 6.65

One-year fixed rate 6.96 Two-year fixed rate 7.42 Three-year fixed rate 7.64 Five-year fixed rate 7.81

Line of credit facility 6.85

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