Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2006 / 9 2 June 2006

Welcome to the ninth fortnightly Cairns Lockie Mortgage Commentary for 2006, aiming 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 (8.00 am on 2 June 2006) the money markets were at the following levels:

Official cash rate 7.25% (unchanged)
90 day bill rate 7.47 (down from 7.49)
1 year swap rate 7.43 (up from 7.38)
3 year swap rate 7.01 (up from 6.93)
10 year bond rate 5.78 (down from 5.87)
Kiwi dollar 0.6316 (up from 0.6223)

Investors Still Bullish on Property

A recent survey carried out by Bank Direct and the Kiwi Property Investor, a magazine aimed at the residential property investor, has found that hardcore investors are the most bullish about the property market. A number of them are planning to purchase more properties over the next 12 months and believe that the current flatter market and the bearish sentiment towards the property market, makes it a good time to buy. The main lesson here, is that in both good and bad economic times there will also be people wanting to rent and another group willing to provide their properties for rental purposes.

South Auckland Lifestyle Blocks Still Popular

One section of the market that is proving popular and has performed well over the past year, according to a report by real estate company, Bayleys Research, is the South Auckland lifestyle market. This includes areas such as Karaka, Clevedon, Waiuku and Takanini. The median price to 31 December 2005 was $727,750, well up on $545,000 the year before. South Auckland is proving popular as it is close to Manakau City, which is fast emerging as a commercial hub within the greater Auckland market with employment opportunities continuing to rise. There are more than 140,000 lifestyle blocks now in New Zealand and it is fair to say that this lifestyle choice will continue to be an attractive alternative for a number of families.

New President for the Property Investors Federation

The New Zealand Property Federation has elected a new president, long time property investor Martin Evans. This federation is a national body comprising 18 regional associations spread throughout the country. It has just fewer than 5,000 members. This is a useful organisation to belong to, if you are or aspire to be a landlord. Most associations have monthly meetings on topics of interest to property investors, such as economic trends within the housing market, tenant management and depreciation. The organisation has been well served over the past year by its out-going president, Andrew King. Andrew has done a good job at increasing the federation's profile in the media.

Depreciation Changes on Rental Properties

As investors are aware, depreciation can be claimed by owners of rental properties which are let to tenants. Certain components of a dwelling such as carpets and blinds depreciate far more quickly than say the actual buildings they are in. Currently many owners depreciate, on an accelerated basis, other items such as wiring, plumbing and kitchen joinery. This is about to change according to recommendations released by the IRD. The IRD proposes to treat assets that are permanently fixed to the property, such as wiring, as being part of the building and so the depreciation rate will be lower. The effect of this is that investors will be able to claim less depreciation.

Our current mortgage interest rates are as follows:

Variable rate 9.20%

No Financials Home Loan 9.80

Jumbo Loan 9.20

Quick Start Home Loan 7.95

One-year fixed rate 8.47
Two-year fixed rate 7.96
Three-year fixed rate 7.99
Five-year fixed rate 7.90

Line of credit facility 9.30

Regards
William Cairns
James Lockie

Cairns Lockie Limited
321 Great South Road, Greenlane, Auckland
PO Box 74-212, Market Road, Auckland
Telephone (09) 526 2000
Facsimile (09) 579 7795
Website http://www.emortgage.co.nz

Residential Mortgage Lenders:

mailto:wcairns@emortgage.co.nz (ddi 09 526 7801)
mailto:gslade@emortgage.co.nz (ddi 09 526 7802)
mailto:plange@emortgage.co.nz (ddi 09 526 7805)
mailto:mwardell@emortgage.co.nz (ddi 09 526 7811)
mailto:kpedersen@emortgage.co.nz (ddi 09 526 7812)
mailto:dpicard@emortgage.co.nz (ddi 09 526 7818)

Lending Support:

mailto:ecarr@emortgage.co.nz (ddi 09 526 7803)
mailto:amarsh@emortgage.co.nz (ddi 09 526 7816)
mailto:mkabel@emortgage.co.nz (ddi 09 526 7806)
mailto:jmills@emortgage.co.nz (ddi 09 526 7804)

Loan Administration:

mailto:lmcrae@emortgage.co.nz (ddi 09 526 7819)
mailto:leverall@emortgage.co.nz (ddi 09 526 7808)
mailto:tchappell@emortgage.co.nz (ddi 09 526 7813)
mailto:mdixon@emortgage.co.nz (ddi 09 526 7814)
mailto:avasquez@emortgage.co.nz (ddi 09 526 7815)
mailto:jlockie@emortgage.co.nz (ddi 09 526 7800)

Loan Arrears:

mailto:ebrooks@emortgage.co.nz (ddi 09 526 7809)
mailto:llancaster@emortgage.co.nz (ddi 09 526 7809)

If you know anyone who may find this newsletter useful, we would be
happy for
you to forward it on.

Cairns Lockie Limited is not a Registered Bank.

ENDS

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