Cairns Lockie Mortgage Commentary
Issue 2003/3 7 March 2003
Welcome to the third 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 7 March 2003) the money markets were at the following levels:
Official cash rate 5.75% (unchanged) 90 day bill rate 5.85 (up from 5.83) 1 year swap rate 5.50
(down from 5.59) 3 year swap rate 5.63 (down from 5.82) 10 year bond rate 5.69 (down from 5.81) Kiwi dollar
0.5650 (up from 0.5587)
Reserve Bank Sticks With Status Quo
Yesterday the Reserve Bank left wholesale interest rates unchanged. This was despite a recent rate cut by the European
Central Bank of a quarter of a percent down to 2.5%. The reasons no similar actions were taken here were largely due to
the strength of the New Zealand economy, unemployment at under 5.0% (a fifteen year low), retail sales being strong, and
the housing market being firm. The Governor hinted that a rate decrease is not imminent but is likely later in the year.
The only wild card that could seriously alter this is the Iraq situation. New Zealand does have the highest cash rate in
the OCED and by maintaining a tight monetary policy we are likely to see some further currency appreciation. In the
short term mortgage rates will remain within their current ranges.
Apartment Living in Nelson?
City apartments are starting to be built in some of our smaller cities. Recently in Nelson all forty-three apartments in
a new complex on Wakefield Quay were sold off the plans within days of being marketed. Prices ranged from $245,000 to
$750,000. The apartments were popular because they were close to the city, had spectacular sea views and Nelson is
proving to be a popular destination. Last year house prices in Nelson appreciated 22%.
100 percent / our no deposit product
Our no deposit mortgage product is proving to be extremely popular. To recap this enables buyers with absolutely no
deposit to purchase a first home. With increasing house prices this makes a lot of sense. It is cheaper to buy now
rather than wait a further twelve months. This particular mortgage is ideally suited to those who have recently returned
from overseas, recently graduated students who are now working, recently divorced people who have a low equity position
wishing to start over again, and newer immigrants who wish to quickly re establish themselves. A clean credit history is
required.
Mortgages in the USA
The Federal Funds Rate in the USA is currently at 1.25%. The prime rate (upon which consumer and housing debt is based)
is at 4.25 percent. The Fed is expected to keep rates steady when it next meets on 18 March. The mortgage market is
slightly different in the USA as most mortgages are either 15 or 30 year fixed rate mortgages. Thirty-year mortgages
range from around 5.0 to 5.5% whereas 15-year mortgages are in 4.5 to 5.0% range. There are the odd specials with
conditions attached at around 4.0%.
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 6.40 (new)
One-year fixed rate 6.71 (new) Two-year fixed rate 6.82 (new) Three-year fixed rate
6.94 (new) Five-year fixed rate 7.11 (new)
Line of credit facility 7.60
Regards William Cairns James Lockie