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Cairns Lockie Mortgage Commentary 20 July 2007

Cairns Lockie Mortgage Commentary

Issue 2007 / 12 20 July 2007

Welcome to the twelfth fortnightly Cairns Lockie Mortgage Commentary for 2007. 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

The Money Market

This morning (8am on 20 July 2007) the money markets were at the
following levels:

Official cash rate 8.00% (unchanged)
90 day bill rate 8.50 (up from 8.36)
1 year swap rate 8.59 (up from 8.46)
3 year swap rate 8.34 (up from 8.26)
10 year bond rate 6.86 (up from 6.69)
Kiwi dollar 0.7932 (up from 0.7817)

Regional House Prices

Quotable Value have recently released their year-on-year figures to June 2007 showing that house prices increased by an average of 12.2% from the previous year. This is no surprise but there were considerable regional variations. The Wellington market grew at 15.8%, Gisborne at 20.7% and Invercargill by a whopping 28.2%. The lowest increases were in our sunshine coastal areas, Hastings at 6.9%, Tauranga at 6.6% and Napier at 2.9%. The Auckland region was around the national average at 11.2%. The policies of the Reserve Bank, so far, are having little impact on the property market.

Building Costs Continue to Climb

One of the reason we have rising house prices is that the input costs to build new houses are continuing to increase. Over the past year, timber prices have increased around 15%, with steel and copper prices rising strongly as well. The price of labour (a large component of any new house development) is continuing to increase. Compliance costs are increasing as well. It is expected that, because of tighter rules under the Building Act 2004, following the leaky building problems of the 1990's, around 4% will be added to the price of a new dwelling. The new insulation rules that are coming in, may well add a further $5,000 to the building costs of a new house. Right across the country, councils appear to be increasing the costs of building consents. As new houses continue to cost more to build, this pushes up the cost of the existing second hand stock. This appears to be an ongoing trend.

Our Finance Company - General Finance Limited

As well as being a mortgage lender, we do take retail deposits. Our flagship rate is 10.15% for two years with interest paid quarterly in arrears. We are releasing a monthly interest option for investors who require more regular income. We use our investors' funds to provide bridging finance and second mortgage finance. If you are, say a property investor that has some spare funds available due to the sale of investments and would like to deposit your funds with a company that only lends these funds in residential property market, then we are the company for you. We keep you informed by quarterly and the odd special newsletter. Our new prospectus has just been released. Please call us if you would like a copy.

Property to Let - Greenlane

We have vacated our premises at 321 Great South Road and moved further down the street to 638. As a result our previous space is now vacant and we are looking for someone to occupy it. There is 220M2 available on a nice first floor with lots of natural light. There is a generous number of car parks available. It is ideal for accountants, lawyers, mortgage brokers or those that require a modern office space located in Greenlane with handy access to the motorway. Those that are interested, please feel free to enquire.

Our current mortgage interest rates are as follows:

Variable rate 9.95%

No Financials Home Loan 10.55

Jumbo Loan 9.95

One-year fixed rate 9.56
Two-year fixed rate 9.40
Three-year fixed rate 9.25
Five-year fixed rate 9.32

Line of credit facility 10.05



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