Cairns Lockie Mortgage Commentary
Welcome to the sixteenth issue of the Cairns Lockie Mortgage Commentary. This is a fortnightly electronic newsletter which aims 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
The Money
Market
This morning (8am on 3 September) the money markets are at the following levels:
Official cash
rate 4.50%
90 day bill 5.00
1 year swap
rate 5.87
3 year swap rate 7.26
10 year bond
7.00
Kiwi dollar 0.5193
Bank Branches- The
Rapid Decline
For years banking commentators have been
saying that New Zealand is over banked. Is this true? Every
year since 1990 we have been reading in the newspapers about
bank branch closures. Last year alone there were over one
hundred bank branches closed. Many of us live in small
towns or suburbs wh
ere only a few years ago there were
two or three bank branches and now there are none.
According to a recent banking and finance report by KPMG,
Chartered Accountants, as a country, we are not over banked.
We have 2.9 bank branches per ten thousand people. This
compares unfavourably with the f
ollowing
countries:
Australia 3.3
Canada 5.4
Japan 6.0
United
Kingdom 7.1
Italy 7.3
Germany 8.1
The USA is slightly lower than New Zealand at 2.7.
Technology improvements are partially responsible for the decline in the number of branches. The days of having a local bank branch nearby, where all the staff knows you, are ending fairly quickly.
A New Trend in Inner City
Housing
In the early 1990's there was a trend towards
inner city living. Developers initially converted older
commercial properties into apartments. Following this,
purpose built apartments have been developed. The newest
trend, which is occurring particularly on the inner city
fringes, is the move to
wards terrace houses. The
favoured locations in Auckland, to date, have been Parnell,
Ponsonby and Mt Eden. Similar trends are expected to follow
particularly in Wellington and Christchurch.
In the middle
and higher price ranges, the market for terrace houses is
similar to that for inner city apartments. At the lower end
(with prices from $200,000) we are seeing considerable
interest from first home buyers. The advantages of these
types of developments are that they are giving New
Zealanders an increasing choice in the accommodation
they may want to purchase.
Mortgage Interest Rates - Where
Are They Going?
Last week we saw further increases in
mortgage interest rates. All the increases have occurred at
the longer end of the yield curve. Three and five year
rates have gone up, but floating rates have remained
unchanged. In NZ we now have a positive yield curve where
longer dated fixed rates remai
n considerable higher than
the floating rates. This is the normal situation. This is
how mortgage interest rates are priced in most countries
which operate relatively free capital markets. In
Australia, which has had a positive yield curve for a number
of years, the majority of mortgages are n
ow written at
floating rates.
We Welcome a New Staff Member
Welcome to Scott Gasson who joined our team this week as a Residential Lending Representative. Scott comes to us with a long background in residential lending with ANZ, Sovereign and Ergo. He may be contacted at mailto:sgasson@emortgage.co.nz
Web Site
Statistics
The number of visitors to our site, in the
month of August grew 20% over the previous month, with page
views growing 22%. We attribute this growth to the
upgrading of our mortgage calculator, which is now our most
popular page. For those of you who have not checked it out
yet, it can be found a
t
http://www.emortgage.co.nz/calculator.htm
If you
wish, you can save the calculator (file menu: save as) and
use it offline.
Our current interest rates are as
follows
Variable rate 5.85%
Two-year fixed
rate 7.60
Three-year fixed rate 7.95
Five-year fixed
rate 8.50
Line of credit facility 6.25
Equity
accelerator 6.25