Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2003/21 14 November 2003

Welcome to the twenty-first Cairns Lockie Mortgage Commentary for 2003. 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/newsletters.htm

The Money Market

This morning (9am on 14 November 2003) the money markets were at the following levels:

Official cash rate 5.00% (unchanged)

90 day bill rate 5.42 (up from 5.22)

1 year swap rate 5.80 (up from 5.67)

3 year swap rate 6.45 (up from 6.33)

10 year bond rate 6.19 (up from 6.12)

Kiwi dollar 0.6295 (up from 0.6115)

Interest Rates in Australia

Last week the Reserve Bank of Australia increased the cash rate by 0.25% to 5.00%, the same as NZ, to try and slow down a strong and speculative housing market. As a result floating mortgage rates in Australia are going up a similar amount. Unlike NZ, the Australian housing market has been bubbling along at double-digit annual increases for the past five years. This latest rise should have little effect on our mortgage rates. Our Reserve Bank will be watching the developments across the Tasman with interest. However the big downside in putting up our cash rate is that it will cause our currency to appreciate further. Many of our exporters are suffering now due to the high exchange rate, and any further currency gains will only make things more difficult for them.

Rental Property Owners Score a Victory.

A recent court case has ruled that tenants are now liable for all their water usage charges. Previously they were liable in some circumstances for the incoming water but not for wastewater charges. For tenants to be liable for all their water charges, three conditions must be met

- the premises must have a separate water meter

- the tenancy agreement must state that the tenant is liable for all water charges

- the water supplier charges for water provided to premises on the basis of metered usage.

We view this as a victory for common sense. Tenants do arrange and pay for all other utilities they use, such as electricity, gas, telephones and fax lines. It should be no different for water.

Extended 95% Mortgage Loan Criteria

Until now we could only provide a 95% mortgage for loan amounts up to $300,000. Due to increasing house prices, a strong economy, plus a number of first homebuyers on good incomes, we have extended this amount to $500,000. The lending criteria remains unchanged. A borrower must have an unblemished credit report, sufficient income to meet the interest payments, plus a genuinely saved 5% deposit. We look forward to receiving more of these applications in the future.

Gentlemen Come to Dunedin

A Dunedin man returning to his home city recently paid $2.0 million for a gentleman's residence located at Taieri, which is just to the south of the city. He said he was attracted to this nearly 100-year-old property by its extensive and attractive grounds. This was more than doubling the previous highest price paid for a Dunedin property.

Our current mortgage interest rates are as follows

Variable rate 6.75%

No Financials Home Loan 7.75

Jumbo Loan 6.75

Quick Start Home Loan 6.65 (new)

One-year fixed rate 6.96 (new)

Two-year fixed rate 7.42 (new)

Three-year fixed rate 7.64 (new)

Five-year fixed rate 7.81 (new)

Line of credit facility 6.85

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