Issue 2002/10 14 June 2002
Welcome to the tenth Cairns Lockie Mortgage Commentary for 2002. 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 June 2002) the money markets were at the following levels:
Official cash rate 5.50% (unchanged)
90 day bill rate 5.93 (up from 5.87)
1 year swap rate 6.48 (down from 6.56)
3 year swap rate 6.82 (down from 6.92)
10 year bond rate 6.62 (down from 6.74)
Kiwi dollar 0.4885 (up from 0.4772)
Politics and Interest Rates
One event that can really spook the financial markets is the mere hint of political instability or uncertainty. Since
the announcement on Wednesday of an early election, (an unusual event on the NZ political landscape), the financial
markets have remained remarkably stable. In fact, mid and longer dated fixed rates have eased around 10 basis points
over the past two days. The exchange rate, another important barometer, has remained firm. What this is telling us, is
that the market has been anticipating an early election, that there are likely to be few surprises during the campaign
and there may be a degree of stability afterwards. This looks good for homeowners with floating rates likely to remain
in the 7.35% to 8.25% range.
Millionaires' House Market Strong
An emerging sub sector of the housing market is the over million dollar sector. In Auckland this market represents 2% of
homes sold by number or 7% of the market by value. This market is currently active. Over the past three months in
Auckland there were 131 house sales in this sector. Most of the sales are taking place in Milford, Takapuna, Parnell and
Remuera. However this market is just not confined to Auckland. In Wellington four properties have sold in the past three
months in Seatoun for over a million dollars. Other parts of Wellington showing high house prices include Kelburn and
Oriental Bay.
House Buyers are Disinterested in Rising Mortgage Rates
Despite three mortgage rate rises this year and the likelihood of a further one in July or August, buyers are continuing
to purchase property. In Auckland in March 2002 there were 3,700 house sales. This was well up on 2,200 this time last
year. The last time the Auckland market recorded 3,500 sales per month was in March 1996. Buyers are considering as
normal, small ongoing increases and decreases in mortgage rates. Movements are in the range of 25 basis points rather
than the 100 basis point range of 10 years ago. Other economic indicators remain favourable, with unemployment expected
to fall further and retail sales currently firm.
Cairns Lockie Expands and Moves
This week has been busy for us. We have completed our fourth move in past three and half years. We are still in the
Central Park complex but in a larger office to accommodate further growth. We are pleased to announce that Nikki
Outshoorn has joined us as a Mortgage Officer and Estelle Carr as an Analyst. Nikki has held similar roles with Eloan
and AMP Banking, and Estelle was formally an underwriter with Gemico Mortgage Insurance. Welcome.
Our current mortgage interest rates are as follows
Variable rate 7.35%
No Financials Home Loan 8.35
Quick Start Home Loan 7.40 (new)
One-year fixed rate 7.71 (new)
Two-year fixed rate 7.97 (new)
Three-year fixed rate 8.14 (new)
Five-year fixed rate 8.31 (new)
Line of credit facility 7.45
Regards William Cairns James Lockie