Cairns Lockie Mortgage Commentary
Issue 2006 / 11 30 June 2006
Welcome to the eleventh 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 30 June 2006) the money markets were at the following levels:
Official cash rate 7.25% (unchanged)
90 day bill rate 7.44 (down from 7.48)
1 year swap rate 7.40 (down from 7.42)
3 year swap rate 6.97 ( down from 6.98)
10 year bond rate 5.86 ( up from 5.82)
Kiwi dollar 0.6040 (down from 0.6226)
Housing Market
Latest figures are confirming that there is still life left in the housing market. Sales are strong but it is taking
longer to sell, with it now taking 38 days on average to sell a dwelling across the country, compared with 34 days in
April 2006. The range last year was 28 to 30 days. Thirty-eight days to sell is still below the ten year average which
is just over 40 days. Over the past month house prices remained remarkably stable, with the median house price in May
2006 nationally $305,500, up very marginally on $305,000 in April 2006. It is fair to say that house prices are really
starting to stabilise.
No Deposit - No Problem
There are a number of people on reasonable incomes who just cannot save a deposit and feel now is the right time to
purchase their own home. Five years ago it was not possible to purchase a home without a deposit, but it is now. It you
are in this position we are able to assist you with our 100% Home Loan. It works quite simply - we advance 95% of the
purchase price under our prime rate product and provide a second mortgage for the remainder. The second mortgage is
structured so it is easy to refinance when your property appreciates in value, merely adding to the first, or the second
mortgage can just be repaid through your own cash flow. We look forward to assisting you.
Average Wealth Increases
As various financial commentators have noted, most of New Zealanders’ wealth is tied up in their own residential
properties. It is estimated that we have just over $500 billion of our total wealth in our houses. This equates to
roughly $345,100 per household. This has more than doubled over the past 10 years. There are several reasons why this is
the case. New Zealanders seem to prefer assets that they can see and touch. Tax is another important consideration,
driving investment in investment properties. From April next year, the Government is proposing a harsh capital gains tax
on all offshore shares (except Australia), which will have the likely effect of reducing our investment in offshore
shares and driving more people towards the security of property.
Issues with Family Trusts
More people are using family trusts to hold their property assets and other investments. Potential borrowers must
realise that by using a family trust they are inserting another structure between themselves and their property. As a
result, there is an increase in administration work. Lenders require loan approvals to be signed by all trustees, and at
settlement, all trustees must sign the change in title and mortgage documents. If a trustee is not available, then this
will hold up the transaction. If you think this may happen, it is wise to obtain a power of attorney to allow the
documents to be signed on the trustees’ behalf. Your solicitor is the person to arrange this for you.
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 8.00
One-year fixed rate 8.43
Two-year fixed rate 7.98
Three-year fixed rate 8.03
Five-year fixed rate 7.89
Line of credit facility 9.30
Regards
William Cairns
James Lockie
--
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