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Cairns, Lockie latest newsletter

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  • Cairns, Lockie latest newsletter

    Hi Guys

    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

    William Cairns
    James Lockie

    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx