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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2005 / 19 21 October 2005

Welcome to the nineteenth Cairns Lockie Mortgage Commentary for 2005. 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

The Money Market

This morning (8am on 21 October 2005) the money markets were at the
following levels:

Official cash rate 6.75% (unchanged)
90 day bill rate 7.33 (up from 7.21)
1 year swap rate 7.39 (up from 7.24)
3 year swap rate 7.06 (up from 6.95)
10 year bond rate 5.85 (down from 5.87)
Kiwi dollar 0.7000 (up from 0.6976)

Mortgage Rates

Over the past two weeks fixed mortgage rates have increased by around 40
- 50 basis points (around half a percent).This has been caused by the increasing likelihood of the Governor of the Reserve Bank in increasing interest rates. As a home loan lender, active in the housing market, we believe any rise in mortgage rates will harm the economy,
" We are already starting to see a slowdown in the housing market. Today's article in the NZ Herald outlining how it is getting more difficult to sell inner city apartments is an indication to this.
" Landlords are telling us that rents are getting a bit softer.
" Any increase in interest rates may well push up our exchange rate which will hurt our important exporting sector. We certainly share the view of the New Zealand Institute of Economic Research (in the Dominion Post on 12 October) that any rise in interest rates may cause our economy to go into a steep decline, resulting in a hard landing.

Bridging Finance

As we are receiving regular inflows of debenture money into our finance company, General Finance Limited, we are increasing our range of bridging finance options. This type of finance is for short durations - for as little as a few days to up to 12 months. It is ideal for someone who has bought a house but has not sold their existing one, and clearly cannot afford to hold both properties in the medium term. If you require short term finance, for whatever reason, we are happy to talk with you.

Business Borrowing

A number of business people are using their own homes as security for business borrowings. There are a number of advantages in doing this:
" Residential housing finance is the cheapest form of borrowing. Borrowing rates of 7.5% -9.0% are often half the rate which banks or finance companies charge for business borrowings.
" The ability to obtain long periods (5 -10 years) of interest-only funds. Most finance companies require principal repayments along with their interest payments. The principal saved can be put to better use within the business as working capital.
" Structures such as trusts can be developed to quarantine the residential home and the business. Tax benefits may also be available. As a non-bank lender we can assist you with your business finance, using your residential property as security.

Offshore Borrowers

We are seeing a noticeably larger number of offshore buyers purchasing property in this country. The reasons for this are varied but include the absence of capital gains tax on property, high relative yields, and some attractive fundamentals of this country. As a company we are happy to lend to offshore investors. In order to gain quick approvals it is important for borrowers to have all their information available, particularly on their income sources and any cash deposits they may have. One advantage Australians have when they are buying here, is that our lending policies treat Australians exactly the same as New Zealanders.

Our current mortgage interest rates are as follows:

Variable rate 8.65%

No Financials Home Loan 9.25

Jumbo Loan 8.65

Quick Start Home Loan 7.90

One-year fixed rate 8.33
Two-year fixed rate 8.04
Three-year fixed rate 7.94
Five-year fixed rate 7.84

Line of credit facility 8.75

William Cairns
James Lockie

Cairns Lockie Limited
321 Great South Road, Greenlane, Auckland
PO Box 74-212, Market Road, Auckland
Telephone (09) 526 2000
Facsimile (09) 579 7795
Email (ddi 09 526
7801) (ddi 09
526 7800) (ddi 09
526 7802) (ddi 09 526
7805) (ddi 09 526
7811) (ddi 09 526
7816) (ddi 09
526 7803) (ddi 09
526 7812) (ddi 09 526
7819) (ddi 09 526
7806) (ddi 09
526 7804) (ddi 09 526
7814) (ddi 09 526
7808) (ddi 09 526
7809) (ddi 09
526 7809) (ddi 09 526
7815) (ddi 09
526 7813)

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

Cairns Lockie Limited is not a Registered Bank.


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