The Money Market

The Money Market

This morning (9am on 21 February 2003) the money markets were at the following levels:

Official cash rate 5.75% (unchanged) 90 day bill rate 5.83 (down from 5.85) 1 year swap rate 5.59 (down from 5.64) 3 year swap rate 5.82 (down from 5.86) 10 year bond rate 5.81 (down from 5.82) Kiwi dollar 0.5587 (up from 0.5495)

House Prices Continue to Increase

New Zealand median house prices rose by 10.4% last year. The strongest performing cities were Nelson (22%), Auckland (19%), Invercargill (17%), Napier (14%), Wellington (11%) and Manakau (11%). This should not be read in isolation. Over the past 12 months there has been strong residential price appreciation in a number of locations such as Australia, U.S.A, U.K, and some European Countries. Some cities such as Sydney and London have seen annual capital gains of close to 20%. In NZ the year has started off well. Real estate agents are saying that despite the increasing threat of war, and slowing retail sales, the demand for both owner-occupied and investment properties remains strong. Some further price appreciation is anticipated.

We Can Now Lend the Full Amount

We have just launched the 100% Home Loan. This means a potential home purchaser or investor can borrow the full amount to acquire a residential property. That is right, 100%. It is made up of a 90% first mortgage at our prime rate plus a 10% second mortgage. It applies to purchasing, refinancing, for both residential and investment properties. Initially it will only apply to the major cities. It is not is not an expensive product, your overall rate is around 8.50%. It is an ideal solution for those with good jobs and clean credit but for various reasons, have not saved the normal 5% deposit.

Fresh Start Expands

The Fresh Start Home Loan is for those with an adverse credit position from a one off event such as illness or temporary unemployment. The Fresh Start lending threshold has increased from 85% to 90% of the property's value, in most parts of Auckland and Wellington. Available areas have also expanded to include more locations both in the North and South Islands, such as Queenstown, and Waiheke Island to name a few. Again this will enable another group of people access to mortgage finance who were until now unable to borrow.

Trusts

An increasing number of our borrowers are using family trusts to own their residential or investment properties. That is fine, but when applying for a mortgage using a trust, some extra paper work is involved. It is best to consider the trust as a separate entity and in order to get your application approved quickly you should provide us with a) A copy of your trust deed. Your solicitor will require this as well. b) Copies of your trusts accounts if your trust owns various assets. If your trust only owns a family home this will not be necessary.

Our current mortgage interest rates are as follows

Variable rate 7.50%

No Financials Home Loan 8.50

Jumbo Loan 7.50

Quick Start Home Loan 6.55 (new)

One-year fixed rate 6.86 (new) Two-year fixed rate 6.97 (new) Three-year fixed rate 7.04 (new) Five-year fixed rate 7.21 (new)

Line of credit facility 7.60

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