Cairns Lockie Mortgage Commentary Issue 2005/7

6 May 2005

Cairns Lockie Mortgage Commentary Issue 2005/7

Welcome to the seventh Cairns Lockie Mortgage Commentary for 2005. 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 (8am on 6 May 2005) the money markets were at the following levels:

Official cash rate 6.75% (unchanged) 90 day bill rate 7.08 (up from 7.04%) 1 year swap rate 7.04 (up from 6.99%) 3 year swap rate 6.76 (down from 6.77%) 10 year bond rate 5.84 (down from 5.93%) Kiwi dollar 0.7345 (up from 0.7276)

Reserve Bank Corrects Market Misconceptions

The Reserve Bank this week was at pains to remove any market misconception that rate rises may have finished. On 3 May Governor Alan Bollard reinforced his statement of 28 April that the economic data suggested that underlying demand and inflation pressures would remain strong and that, in this environment, further policy tightening could not be ruled out. The next Monetary Policy Statement is due on 9 June 2005. Mr Bollard said "Certainly, the current outlook offers no scope for an easing of policy in the foreseeable future". Watch this space.

Lifestyle Blocks Ever So Popular

Lifestyle blocks, a house in the country with a few hectares of land within driving distance from a major city, have always been popular in this country. This sector of the market is showing strong growth. Back in 1993 there were around 75,000 of these types of properties and 10 years later (to 2003) they had increased to 139,000. Currently, the number of lifestyle blocks is increasing at around 6,800 per year. Lifestyle blocks are now found around all our cities not just the large ones such as Auckland and Wellington but also close to cities such as Palmerston North and Dunedin. The buyers of these types of properties want the best of both worlds, living in the country with the advantage of obtaining a city income. This trend is expected to continue.

Auckland Inner City Apartments

Real Estate company, Bayleys has recently produced an interesting report on the Auckland CBD apartment market. This area of the housing market has seen some strong growth. Today there are 10,570 apartments in 135 complexes compared with only 4,000 in 1998. Contrary to some popular misconceptions that the apartment is full of shoe boxes designed for students, the largest type is in fact two bedroom apartments at 37% of the total inventory. The next group is one bedroom apartments that make up 32% and studios at 16%. The remainder have three and four bedrooms. Most of the apartments are used as residential accommodation (63%), 23% are serviced and the rest (14%) are designed for the student market. It is expected a further 3,920 will be completed this year with things slowing in 2006 with 1,585 apartments planned for completion.

Alternative Holiday Home

How about an apartment in Northern Tuscany, Italy. We recently read the following advertisement for a 3 bedroom apartment in Castelnuovo Magra. "In a prestigeous (sic) old building (c. 1600) with a splendid sea view, a fabulous 170m2 apartment (which is partially frescoed) comprising five rooms and two bathrooms. Great finishings." Price E255,000 or NZ$460,000. Compares well with coastal New Zealand, just harder to get to.

Our current mortgage interest rates are as follows

Variable rate 8.65% No Financials Home Loan 9.25 Jumbo Loan 8.65 Quick Start Home Loan 7.40 One-year fixed rate 7.83 Two-year fixed rate 7.79 Three-year fixed rate 7.89 Five-year fixed rate 7.89 Line of credit facility 8.75

Cairns Lockie Limited is not a Registered Bank.

ENDS

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