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Cairns Lockie Mortgage Commentary - 12 October 07

Cairns Lockie Mortgage Commentary

Issue 2007 / 18 12 October 2007

Welcome to the eighteenth fortnightly Cairns Lockie Mortgage Commentary for 2007. We aim to keep you informed on developments at Cairns Lockie, Home Loans and the mortgage market in general. Previous issues of this commentary can be found on our website

The Money Market

This morning (8 am on 12 October 2007) the money markets were at the following levels:

Official cash rate 8.25% (unchanged)
90 day bill rate 8.70 (down from 8.90)
1 year swap rate 8.72 (up from 8.65)
3 year swap rate 8.29 (up from 8.08)
10 year bond rate 6.29 (up from 6.23)
Kiwi dollar 0.7638 (up from 0.7447)

Housing market

Some paradoxes are appearing in the latest September housing figures from the Real Estate Institute of New Zealand. Houses are taking longer to sell (now on average 32 days, up slightly from 31 days a year ago), house sale volumes have dropped considerably yet prices are holding up. Sales volumes countrywide were 5,894 in September, well off the 10,686 from September 2003 (the decade high) and September last year (8,658). The typical spring surge in house sales numbers is not occurring. However prices continue to remain firm. The average house price for the country was $351,500 up from $350,000 from the month before, and well up from $313,000 in the previous year. It is interesting to note the average house price was $185,000 only five years ago. Auckland is the second most expensive district, with an average house price of $441,500, with the Central Otago Lakes region being the most expensive in the country at $477,500.

State Housing Fraud

This appears to be an on-going issue. A report signed-off recently by the Housing Corporation revealed that its fraud investigation unit has received a sharp increase in the number of fraud allegations, up from 101 in 2002, to 723 in the past financial year. Obviously the public and existing Housing Corporation tenants are concerned with this issue. One Housing Corporation tenant is about to go to court after receiving $32,650 in rental payments from the subletting of his property, while living elsewhere. This is a big issue and the Housing Corporation has a real duty to the tax payer to stamp out this sort of abuse. The number of fraud allegations should be declining not increasing.

Australia Catches Up with New Zealand in E - Conveyancing

In New Zealand our titles system is now all electronic, rather than relying on the old parchment title deeds. Since 1 May 2007 it has been mandatory for all discharges to be submitted electronically and with the majority of mortgages now being registered electronically as well. The State of Victoria in Australia is expected to be the first state in that country to introduce a fully fledged system of e-conveyancing. The rest of Australia is expected to catch up by 2010. The advantages of going electronic are that it should greatly speed up the process and hopefully reduce the costs.

General Finance

Our subsidiary company, General Finance Limited is looking for investors funds. Our flagship rate is 10.15% for 2 years with interest paid quarterly. A monthly interest option is available. Potential and current investors should note that this company invests in only residential first and second mortgages. We prepare a quarterly newsletter for our investors and the last one was sent out at the end of September. You are most welcome to request a copy. We will be announcing our six monthly results to 30 September 2007 for General Finance next month.

Our current mortgage interest rates are as follows:

Variable rate 10.20%

No Financials Home Loan 10.80

Jumbo Loan 10.20

One-year fixed rate 9.85
Two-year fixed rate 9.34
Three-year fixed rate 9.39
Five-year fixed rate 9.42

Line of credit facility 10.05

William Cairns
James Lockie

Cairns Lockie Limited
638 Great South Road, Ellerslie, Auckland
PO Box 74-212, Market Road, Auckland


Cairns Lockie Limited is not a Registered Bank.

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