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Cairns Lockie Mortgage Commentary 15 December 2006

Cairns Lockie Mortgage Commentary

Issue 2006 / 23 15 December 2006

Welcome to the last fortnightly Cairns Lockie Mortgage Commentary for 2006. We aim 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 15 December 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged) 90 day bill rate 7.65 (unchanged) 1 year swap rate 7.74 (up from 7.69) 3 year swap rate 7.36 (up from 7.35) 10 year bond rate 5.78 (up from 5.76) Kiwi dollar 0.6934 (up from 0.6785)

Now We Are Eight

2006 has been an active one for us. We have introduced a number of changes over the last twelve months. Enhancements to our popular "No Financials" home loan include increasing our loan to value limits up to 85% and increasing single exposures up to $1.5 million. We have always been keen to assist the self employed in making it easier to obtain mortgage finance. We feel we are being successful in this area. We have made 100% borrowing a lot easier - we can offer a single home loan or a composite first and second mortgage together. We do recognize that it is getting more difficult for first time home buyers to purchase a property and our 100% offering goes a long way to assisting this group. As a result of being a deposit taker, with our own finance company, we are continuing to offer a broad range of second mortgage and bridging options.

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Our 2007 Crystal Ball

Last year many were expecting a slowdown during 2006. This has not occurred. There are a number of trends that are likely to give us an indication of what 2007 will have in store. Unemployment remains low, which will continue to allow first home buyers to enter the property market. Immigration will continue - this is not only positive for the economy, it is good for the residential property market as well. During the whole of 2006, interest rates remained essentially unchanged and they appear to have peaked. The housing market remains firm but is expected to slow a little next year. We believe 2007 will be similar to this year with a steady demand for well located properties. Overall the economy will be similar to this year, but more subdued than in 2004 and 2005.

Housing Boom Makes More Millionaires

Reuters International reported recently that, as a result of the strong United Kingdom housing market over the past twelve months, the number of sterling property millionaires ($3 million in NZ dollars) has increased by around 32%. There are now believed to be around 79,000 owners of homes worth in excess of one million pounds. By far the greatest numbers are in London or in the south eastern part of England closest to that city. This is due to the buoyant British economy, strong currency, and these areas seen as good places by wealthier foreigners in which to purchase residential real estate. The United Kingdom now is considered to be one of the most expensive residential real estate markets in the world.

Lifestyle Blocks Continue To Do Well

Prices for lifestyle blocks continue to rise despite more expensive commuter costs both in fuel charges and time with our more congested roads. The median price nationwide, according to the Real Estate Institute of NZ, was $415,000 for October, up from $400,000 in September, and well up on $312,500 three years ago. The best value in lifestyle blocks can be found in the Wangaui/ Manawatu area with a median price of $261,500 and the most expensive at $750,000 around Auckland. Estate agents say demand remains reasonably strong and in some areas there are a shortage of listings.

We wish everyone a Merry Christmas and safe and happy New Year. Our next newsletter will be 16 February 2007.

Our current mortgage interest rates are as follows:

Variable rate 9.20%

No Financials Home Loan 9.80

Jumbo Loan 9.20

One-year fixed rate 8.78 Two-year fixed rate 8.14 Three-year fixed rate 8.17 Five-year fixed rate 8.08

Line of credit facility 9.30

Regards William Cairns James Lockie

ENDS

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