Cairns Lockie Mortgage Commentary

Cairns Lockie Mortgage Commentary

Issue 2009 / 9 5 June 2009

Welcome to the ninth fortnightly Cairns Lockie Mortgage Commentary for 2009. We aim to keep you informed on developments at Cairns Lockie, Home Loans 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 am on 5 June 2009) the money markets were at the following levels: Official cash rate 2.50% (unchanged)90 day bill rate 2.70 (down from 2.76)1 year swap rate 2.90 (down from 2.91)3 year swap rate 4.25 (up from 4.10)10 year bond rate 5.90 (up from 5.52)Kiwi dollar 0.6345 (up from 0.6093) The Budget There were a few bits of the budget impacting on property owners. The new funding scheme to assist with putting better heating and insulation into our homes is positive.

The price of electricity, for the past ten years, has been increasing faster than the rate of inflation and it is likely to continue to do so. Any incentives to save electricity or to use it more efficiently have to be welcomed. Eliminating the little-used mortgage diversion scheme from Kiwi Saver is not positive. It should have been made more user friendly as this feature does benefit certain sectors of the community. The budget is expected to be neutral on mortgage rates. Solution to Auckland’s Housing Crisis Auckland, compared to other cities in this country, has an issue with expensive housing.

This prohibits a number of people from purchasing their own homes. One easy solution is a fast train system between Auckland and Hamilton which will enable a number of people to take advantage of lower house prices in that city while still being able to work in Auckland. Apart from cheaper housing Hamilton offers other advantages - it is a smaller centre, offers more of a country feel but it does have a good existing infrastructure in place.

A fast reliable train service is worth considering and it is a fairly simple, cheap and immediate solution to implement. Changes to the Tenancy Tribunal The new Residential Tenancies Amendment Bill (No2) is currently being introduced to Parliament. There has been some changes made by the new Government that include: letting fees can still be charged, tenant liability will now be capped at ten weeks not the four weeks proposed by the previous Government, advocates will be introduced to the tenancy tribunal and landlords will have to disclose if their premises have ever been contaminated by drugs.

The changes address some of the issues raised by landlords at a previous reading. There will be an opportunity for submissions to be made when it reaches the select committee stages. Interest Rates Across the TasmanFrom time to time we update you with what is happening with mortgage rates across the Tasman. They are generally lower than ours but only marginally despite their official cash rate being higher at 3.0% than our 2.5%. Their two year fixed rates range from 5.50% to 6.20% compared with ours, ranging around from 5.90% to 6.90%.

Unlike here, most mortgages written across the Tasman are at floating rates. Their floating rates range from 5.20% to 6.00%. They are still below ours at around 6.40-6.75%. We should have mortgage rates at around the Australian rates but we do not, as we are paying more for our political risk, and we are a smaller economy compared to Australia.

Due to fewer non banks here, there is probably less competition in this market and the existing operators may be earning a slightly higher margin. Mortgage Interest Rates For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender or the Cairns Lockie Limited Loan Administration Department (below). RegardsWilliam CairnsJames Lockie Cairns Lockie Limited638 Great South Road, Ellerslie,

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