Cairns Lockie Commentary

Published: Fri 23 Jul 1999 10:27 AM
Issue 13 23 July 1999
Welcome to the lucky thirteenth issue of the Cairns Lockie Mortgage Commentary. 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 (and soon, a mortgage calculator) can be found on our website
The Money Market
This morning (8am on 23 July) the money markets are at the following levels:
Official cash rate 4.50%
90 day bill 4.72
1 year swap rate 5.19
3 year swap rate 6.40
10 year bond 6.55
Kiwi dollar 0.5290
Should You Fix or Float!
Over the past few years we have had an inverse yield curve in New Zealand where fixed rates were lower than floating rates. Borrowers took advantage of this differential and fixed their mortgages. With many of these fixed terms now maturing we are getting a number of enquiries from borrowers who need to decide whether to fix again or stay floating.
The yield curve is now positive. The Cairns Lockie floating rate is 5.85%, whereas our five-year fixed rate is 8.15%; a difference of 2.30%. Borrower currently seem more inclined to capture this differential and stay floating. The exception is where individual circumstances require the certainty associated with a fixed rate.
The inverse yield curve is an unusual situation. In most countries, with relatively free capital markets, short-term rates are lower than the longer-term rates. New Zealand is likely to have a positive yield curve over the next few years. We understand that, in Australia which has a positive yield curve for some time, most new home loans are being written on floating rates.
Property Rates: How Does Your City Council Compare?
In the press recently, there has been a lot of discussion on property rates and how they are increasing. Some of our clients have asked, how do their property rates compare with other centres. The average rates were recently published by Evening Post in Wellington. They are
Auckland City 1,426
Christchurch City 810
Dunedin City 1,111
Hamilton City 1,083
Hutt City 1,368
Invercargill City 917
Kapiti Coast 1,227
Manakau City 1,328
Napier City 1,035
North Shore City 1,383
Palmerston North 1,161
Porirua City 1,535
Tauranga City 1,171
Upper Hut City 1,267
Waitakere City 1,490
Wellington City 994
The above figures include regional rates, with adjustments for water, wastewater and rubbish collection where these are charged separately.
No Slow Down in Inner City Apartment Market
The inner city Auckland apartment continues to grow. At December 1998 there were approximately 4,000 completed units in the city. The apartment market has grown at an average rate of 98.5% per annum, equating to just over 739 apartments per annum. Over the next two years the total number of inner city apartments is forecast to increase to over 5,600. This equates to a 41% increase in total apartment numbers over a two-year period. (Source-Bayleys Research)
Electronic Banking in Scandinavia
In Scandinavia, the world’s highest penetration of mobile telephones and internet usage has contributed to sophisticated electronic banking services. The Swedish lender SEB has 20% of its retail client base using the internet. Sweden’s largest lender Svenska Handelsbanken has 140,000 internet customers and is adding 10,000 customers a month. The only service not available over the internet is lending. At Cairns Lockie, while we are not adding 10,000 customers per month (yet), we DO offer internet lending. To see how, visit us at
Our current interest rates are as follows
Variable rate 5.85%
Two-year fixed rate 7.05
Three-year fixed rate 7.55
Five-year fixed rate 8.15
Line of credit facility 6.25
Equity accelerator 6.25

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