Cairns Lockie Mortgage Commentary 17 July 09
Cairns Lockie Mortgage Commentary
Issue 2009 / 12 17 July 2009
Welcome to the twelfth fortnightly Cairns Lockie Mortgage Commentary for 2009. 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 http://www.emortgage.co.nz/newsletters.htm
The Money Market
This morning (8 am on 17 July 2009) the money markets were at the following levels:
Official cash rate
90 day bill rate 2.79 (down from 2.81)
1 year swap rate 3.02 (up from 2.96)
3 year swap rate 4.51 (up from 4.40)
10 year bond rate 6.22 (down from 6.30)
Kiwi dollar 0.6421 (up from 0.6270)
Is the Recovery Here?
It was interesting hearing the comments of the Reserve Bank Governor on Wednesday this week saying "That there are signs of a recovery and we may be ahead of the pack". Lets hope that this turns out to be true. We believe these comments are a bit premature. The residential market is showing signs of improvement but other sectors are not. The commercial and office leasing market is in the doldrums and the latest figures show that farm sales prices are definitely easing. Unemployment is expected to increase further over the next twelve months. We may have avoided a deep recession but the business environment is still particularly challenging at the moment.
Increasing our Living Standards to those of Australia
It is interesting that the Government is to form a Productivity Commission, looking at ways to improve our productivity and to bring our living standards in line with those of Australia. The easiest way to bring our living standards closer to those of Australia is full integration with Australia, such as common currency, laws and one Government for both countries. A similar model is working in Europe with the European Union. No doubt we would hear the usual criticisms of this idea such as loss of independence, sovereignty and the uniqueness of New Zealand culture. The same arguments were played out in Europe in the 1960's/1970's. This has not at all happened. Has French culture and its uniqueness diminished by being part of a larger union? It has not - the same will also apply to New Zealand, so let’s get on with it.
Shortgage of Listings
According to the real estate commentators, the residential market is stabilising and there appears to be a shortage of stock developing in some areas. There are several reasons why there may be a shortage of stock - potential sellers may be holding back for prices to improve, and why sell now if you do not have to - prices may be better next year. There may be fewer forced sales coming on to the market. We are certainly aware of some pent up demand from first home buyers, who would enter the market, if the strictly enforced 20% deposit was eased to 10%. This is largely on the back of much lower mortgage rates - rates we have not seen in nearly forty years in this country. Many of these potential buyers are saying it is starting to be cheaper to buy than rent. We are also aware that far fewer new houses are being built so the residential property market may have bottomed in our major cities.
General Finance Funding
Our associated company General Finance Limited is now looking for more investors funds. Over the past two months our lending has increased and we are looking for more debenture deposits. Virtually all our new lending is first mortgages in the residential sector. Our headline rate, which is attractive in this very low interest rate environment, is 8.0% for a 3 year term. If you have funds to invest with a finance company with a Government guarantee please do not hesitate to contact us. We welcome your enquiries. Let us know if you would like a copy of our new Prospectus, which will be out soon
Mortgage Interest Rates
For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender (below) or the Cairns Lockie Limited Loan Administration Department (below).