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Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2005 / 21 18 November 2005

Welcome to the twenty-first 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 18 November 2005) the money markets were at the following levels:

Official cash rate 7.00% (unchanged)
90 day bill rate 7.59 (up from 7.42)
1 year swap rate 7.57 (up from 7.45)
3 year swap rate 7.23 (up from 7.21)
10 year bond rate 5.91 (down from 6.02)
Kiwi dollar 0.6842 (down from 0.6926)

Reserve Bank Regulations

Over the past week the Reserve Bank has made some extraordinary and ill thought-out comments about trying to regulate the housing markets by such things as limiting how much a lender can advance against a given property. The Governor should be aware that countries like Australia and the United Kingdom have recently had housing booms and these have ended naturally. If an individual wants a 100% mortgage in order to purchase their home, and both the borrower and lender believe it can be afforded, what right has a government agency to say they cannot have their mortgage. This may occur in places like Zimbabwe but does not happen in any western country. The claim that we are over attached as a nation to purchasing rental properties is unfounded, as again, countries like Australian and the United Kingdom have roughly the same level of home ownership as we do and also the same level of rental housing. New Zealanders are providing for their own superannuation through housing ownership in the absence of any other credible and stable scheme being available.

Surprise Revaluations in Wellington

The Wellington City Council is currently releasing their valuations for the city. Citywide house values have risen by an average of 10.5% to $442,800 up from $399,000 in 2004. There were some surprises with the predominately blue collar suburb of Tawa showing an average increase of over 15% to $308,600. Buying in Tawa is popular with both first home buyers and property investors who are looking for slightly higher rental yields. Other areas experiencing larger gains were the popular inner city suburb of Thorndon which experienced an increase of 17.9% to an average capital value of $661,500 and Kilbernie/ Rongatai which increased by an average of 12% to $390,800. A 10.5% gain over 12 months is a sizable increase in house values particularly when Wellington does not have the same inflow of newer migrants as Auckland.

Rent Disputes and the 10 day Letter

Most landlords, at sometime of their investing career, may have to use Tenancy Services, with the majority of cases taken being for rental arrears. A big problem then faced by landlords is in recovering the arrears. The bailiffs of our courts seem to be rather slow in this area. Tenancy Services is planning to double the number of offices, including in a number of smaller towns such as Picton and Kaikoura, previously without tenancy services. In addition telephones and internet services will be expanded. Landlords can speed up the recovery process with the use of the 10 day letter, as soon as rent is in arrears (personally delivered if possible). If the default is not remedied by the end of the 10 day notice period the landlord may immediately apply to the tenancy tribunal for a hearing. This is faster than waiting for 21 days' arrears before taking action.

New Rate of 9.99% for Our Investors

The flagship rate of our subsidiary company, General Finance Limited, has recently increased to 9.99% for two years with the minimum deposit being $5,000. Interest is paid to investors on a quarterly basis (or compounded) and unlike the share market, investments in debentures do not fluctuate in price and are redeemed at the issue price. Other terms ranging from 6 months to 5 years are available at different rates. For a prospectus, which also contains our investment statement, please do not hesitate to call us on 0800 500 602 or you can download one at

Our current mortgage interest rates are as follows:

Variable rate 8.90%

No Financials Home Loan 9.50

Jumbo Loan 8.90

Quick Start Home Loan 8.00

One-year fixed rate 8.53
Two-year fixed rate 8.24
Three-year fixed rate 8.14
Five-year fixed rate 8.04

Line of credit facility 9.00

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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