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Cairns Lockie Mortgage Commentary 20 June 2008

Cairns Lockie Mortgage Commentary

Issue 2008 / 10 20 June 2008

Welcome to the tenth fortnightly Cairns Lockie Mortgage Commentary for 2008. 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 20 June 2008) the money markets were at the following levels:

Official cash rate 8.25% (unchanged)
90 day bill rate 8.66 (unchanged)
1 year swap rate 8.25 (unchanged)
3 year swap rate 7.68 (up from 7.60)
10 year bond rate 6.40 (up from 6.35)
Kiwi dollar 0.7625 (down from 0.7660)

House Sales

The latest Real Estate Institute figures show that the median house sale price for New Zealand in May 2008 was $345,000, the same as the month prior, and only $5,000 less than what it was in May 2007. Houses are now taking considerably longer to sell - now at 49 days, up from 30 days, the same time last year. Fewer than half the number of houses sold in May 2008 than were sold in May 2007. Over the past three months, sales have been hovering around 45% of the number for the corresponding period last year. Estate agents have commented there has not been any large slide in house prices, as some are predicting. However, they do note, if you have to sell, or for houses in poor condition or a mortgagee sale then you do have to discount more than when the market was more buoyant last year.

Latest Survey

Recently the Mercer 2008 Quality of Living Survey was released ranking cities of the world from the best to the worst to live in for 2007. As in 2006, the Swiss, German cities and one Canadian city all ranked in the top 10, while Bagdad ranked as the wost place in the world to live. What was pleasing, was that Auckland ranked as number 5 and Wellington 13th as the best places to live. Sydney also ranked well at number 10 and Melbourne was 17th. This is good news for our two main cities and our civic and Government leaders have the ability to improve on our scores by improving public transport and policing. This is a positive report for our country. To look at the survey in more detail go to


According to Bayleys Research, the upper end of the CBD apartment market, which is defined as the top 15% of all apartments by value, has maintained a consistent annual growth from 2002 to 2007, with a 39% increase in the median value to $550,000. Market transactions have been fairly consistent with around 200 - 250 of these apartments selling each year. This part of the market tends to be dominated by owner occupiers rather than investors. Rentals for top of the range apartments are holding up well with the two bedrooms ones letting for between $550 - 650 per week and three bedroom ones from between $800 to a bit over a $1,000 per week for unfurnished dwellings. The drivers for capital and rental growth are the same for all properties and depend upon size, location and quality of decor. What helps apartments in this price range is having more than one car parking space.

Relaunching Some of Our Products

With the world wide credit crunch we had to restrict the criteria on some of our products, such as the bridging and the asset lend products. We are now looking at relaxing the criteria and reinstating the original terms. With our asset lend product, which is currently restricted to an LVR of 60%, we are looking at increasing this back to 70%. Our bridging product will revert back to a true one where the servicing is based on the final loan amount only, not including the short term bridging component as well. These are positive improvements and we will be updating you shortly on these new developments.

Our current mortgage interest rates are as follows:

Variable rate 10.65%

Lo Doc Home Loan 11.55

Jumbo Loan 10.65

One-year fixed rate 9.58
Two-year fixed rate 9.24
Three-year fixed rate 9.34
Five-year fixed rate 9.79

Line of credit facility 10.75


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