Cairns Lockie Mortgage Commentary 5 May 2006

Cairns Lockie Mortgage Commentary Issue 2006 / 7 5 May 2006

Welcome to the seventh Cairns Lockie Mortgage Commentary for 2006. 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 (8am on 5 May 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged) 90 day bill rate 7.50 (up from 7.48) 1 year swap rate 7.32 (up from 7.26) 3 year swap rate 6.92 (up from 6.72) 10 year bond rate 5.82 (up from 5.78) Kiwi dollar 0.6390 (up from 0.6335)

Higher Mortgage Rates Across the Tasman

Last week our Reserve Bank left our Official Cash Rate unchanged at 7.25% - but this week the Australian Reserve Bank Governor increased their's from 5.50% to 5.75%. The reasons given were inflation concerns and a strong economy. Floating rate mortgages across Australia will rise by a quarter of a percent. As the New Zealand currency is likely to depreciate, and with higher interest rates in Australia, offshore investors will view Australia as a more attractive place to invest their short term funds. A lower exchange rate against Australia is good for our exporters but it does widen the gap in the standard of living between the two countries.

Bridging Finance

We have short term bridging finance available with terms of up to twelve months. This type of finance is ideal if you have bought a new property but have not (although intend to) sell your existing dwelling. Bridging finance is also available for those who are planning to sell their property but require a small second mortgage for a couple of months to carry out a few home improvements. We welcome your enquiries.

A Bargain in Coastal Property

In the past five years most coastal property had risen substantially in value. Occasionally you can find a bargain. Recently an older style kiwi batch on a hill top section with great sea views located in South Wairarpa sold for $87,000. The only hitch was that the area does suffer from seaborne erosion.

Make up of the Auckland Apartment Market

Over the past year a further 4,050 new apartments have come on stream in Auckland. There are now around 13,400 apartments in the greater CBD according to recent research by Bayleys Real Estate. The apartment mix is interesting - 70% are owner occupied residential or tenanted, 10% are dedicated to the student market while 17% are classified as serviced and operate more as short term hotel or motel type accommodation. The increase in new apartments within the city over the next 2 years is expected to slow considerably. Due to continued congestion of Auckland roads, poor public transport options and likely higher fuel prices the longer term growth prospects for inner city apartments looks good.

Our current mortgage interest rates are as follows:

Variable rate 9.20%

No Financials Home Loan 9.80

Jumbo Loan 9.20

Quick Start Home Loan 7.95

One-year fixed rate 8.38 Two-year fixed rate 7.84 Three-year fixed rate 7.79 Five-year fixed rate 7.74

Line of credit facility 9.30

Regards William Cairns James Lockie

ENDS

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