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Cairns, Lockie latest newsletter for 23 July 2004.
Cairns Lockie Mortgage Commentary
Issue 2004/13 23 July 2004
Welcome to the thirteenth Cairns Lockie Mortgage Commentary for 2004.
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 afternoon (8am on 23 July 2004) the money markets were at the
following levels:
Official cash rate 5.75% (unchanged)
90 day bill rate 6.26 (up from 6.22)
1 year swap rate 6.42 (unchanged)
3 year swap rate 6.52 (down from 6.56)
10 year bond rate 6.11 (down from 6.19)
Kiwi dollar 0.6380 (down from 0.6560)
How We See the Property Market
There have been a number of reports in the press recently about various
different scenarios (mainly negative) for the property market. We are in
the market every day talking with property investors, home buyers,
mortgage brokers and real estate agents, and so we have a reasonably
informed view. Overall we are still generally positive. Negative aspects
include an easing in rentals (particularly in Auckland), a longer time
to sell and a reduction in numbers of properties sold. On the positive
side some agents are saying that in the prime suburbs there is a
shortage of stock emerging and that they want more listings. We are
aware that construction costs are continuing to increase and this is
still causing many new buildings to increase in price. Home renovators
are still saying it is as hard as ever to find trades people. Overall we
still see a robust but slightly slowing market.
Capital Gains on Property
The Government has been looking at the current levels of depreciation
and whether they accurately reflect the economic life of those assets
being depreciated. At the same time they have looked at and decided
against bringing in a capital gains tax on residential rental
properties. The Government does not want to see our tax rules favouring
say an investment in residential housing over that of establishing a
high tech business. The rationale here is that investment decisions
should be made on the financial basis of a particular industry rather
than having taxation issues distorting the investment process. We view
this as a sensible and positive outcome.
Equity Release Mortgages
Equity Release Mortgages allow borrowers over 60 without an income
stream to access the equity in their houses. Uses for such mortgages
include home improvements, holidays, and medical operations. There are
no monthly payments and the mortgages are repaid by the sale of the
mortgaged asset at the option of or on the death of the borrower. There
are a number of issues to consider: the most important is inheritance.
If you have one of these mortgages there will be a reduction in the size
of your estate. These types of mortgages are most suited to those who
are asset rich, really only have national superannuation and want to do
more things in life. At Cairns Lockie we are now providing this type of
mortgage. We welcome your enquiry.
Mortgages in the UK
The Official Cash Rate (OCR) in New Zealand is currently 5.75% and in
the UK it is 4.5%. On this information alone you would expect their
mortgage rates to be around 1.5% less than ours. This is exactly the
case. The average floating rate is around 6.2 - 6.7% and the shorter
term fixed rates (two years) are 6.5 - 6.7%. As in this country the
floating rates and the fixed rates are reasonably bunched together. This
confirms that one of the main determinants of mortgage rates is the
Official Cash Rates and in most countries in the OECD these are priced
somewhere between 1.5% and 2.5% over these rates. The margins charged in
this country over the OCR are comparable with the United Kingdom.
Our current mortgage interest rates are as follows
Variable rate 7.65%
No Financials Home Loan 8.65
Jumbo Loan 7.65
Quick Start Home Loan 7.25
One-year fixed rate 7.56
Two-year fixed rate 7.67
Three-year fixed rate 7.79
Five-year fixed rate 7.91
Line of credit facility 7.75
Regards
William Cairns
James Lockie
Regards
Cairns, Lockie latest newsletter for 23 July 2004.
Cairns Lockie Mortgage Commentary
Issue 2004/13 23 July 2004
Welcome to the thirteenth Cairns Lockie Mortgage Commentary for 2004.
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 afternoon (8am on 23 July 2004) the money markets were at the
following levels:
Official cash rate 5.75% (unchanged)
90 day bill rate 6.26 (up from 6.22)
1 year swap rate 6.42 (unchanged)
3 year swap rate 6.52 (down from 6.56)
10 year bond rate 6.11 (down from 6.19)
Kiwi dollar 0.6380 (down from 0.6560)
How We See the Property Market
There have been a number of reports in the press recently about various
different scenarios (mainly negative) for the property market. We are in
the market every day talking with property investors, home buyers,
mortgage brokers and real estate agents, and so we have a reasonably
informed view. Overall we are still generally positive. Negative aspects
include an easing in rentals (particularly in Auckland), a longer time
to sell and a reduction in numbers of properties sold. On the positive
side some agents are saying that in the prime suburbs there is a
shortage of stock emerging and that they want more listings. We are
aware that construction costs are continuing to increase and this is
still causing many new buildings to increase in price. Home renovators
are still saying it is as hard as ever to find trades people. Overall we
still see a robust but slightly slowing market.
Capital Gains on Property
The Government has been looking at the current levels of depreciation
and whether they accurately reflect the economic life of those assets
being depreciated. At the same time they have looked at and decided
against bringing in a capital gains tax on residential rental
properties. The Government does not want to see our tax rules favouring
say an investment in residential housing over that of establishing a
high tech business. The rationale here is that investment decisions
should be made on the financial basis of a particular industry rather
than having taxation issues distorting the investment process. We view
this as a sensible and positive outcome.
Equity Release Mortgages
Equity Release Mortgages allow borrowers over 60 without an income
stream to access the equity in their houses. Uses for such mortgages
include home improvements, holidays, and medical operations. There are
no monthly payments and the mortgages are repaid by the sale of the
mortgaged asset at the option of or on the death of the borrower. There
are a number of issues to consider: the most important is inheritance.
If you have one of these mortgages there will be a reduction in the size
of your estate. These types of mortgages are most suited to those who
are asset rich, really only have national superannuation and want to do
more things in life. At Cairns Lockie we are now providing this type of
mortgage. We welcome your enquiry.
Mortgages in the UK
The Official Cash Rate (OCR) in New Zealand is currently 5.75% and in
the UK it is 4.5%. On this information alone you would expect their
mortgage rates to be around 1.5% less than ours. This is exactly the
case. The average floating rate is around 6.2 - 6.7% and the shorter
term fixed rates (two years) are 6.5 - 6.7%. As in this country the
floating rates and the fixed rates are reasonably bunched together. This
confirms that one of the main determinants of mortgage rates is the
Official Cash Rates and in most countries in the OECD these are priced
somewhere between 1.5% and 2.5% over these rates. The margins charged in
this country over the OCR are comparable with the United Kingdom.
Our current mortgage interest rates are as follows
Variable rate 7.65%
No Financials Home Loan 8.65
Jumbo Loan 7.65
Quick Start Home Loan 7.25
One-year fixed rate 7.56
Two-year fixed rate 7.67
Three-year fixed rate 7.79
Five-year fixed rate 7.91
Line of credit facility 7.75
Regards
William Cairns
James Lockie
Regards