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  • Cairns Lockie Mortgage Commentary

    Hi Guys

    Cairns Lockie Newsletter for this week:

    Cairns Lockie Mortgage Commentary

    Issue 2004/17 17 Sept 2004

    Welcome to the seventeenth 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 morning (8am on 17 Sept 2004) the money markets were at the
    following levels:

    Official cash rate 6.25% (up from 6.00)
    90 day bill rate 6.68 (up from 6.55)
    1 year swap rate 6.75 (up from 6.66)
    3 year swap rate 6.69 (up from 6.6
    10 year bond rate 6.16 (down from 6.20)
    Kiwi dollar 0.6586 (up from 0.6456)


    Cairns Lockie Expands Product Range With Another Wholesale Funder

    Cairns Lockie Limited is termed a non-bank lender as we rely on
    wholesale providers for our funding. Twenty years ago a company such as
    ours would have operated exactly like a Building Society, relying on
    retail deposits. Today we use wholesale funders to give us access to the
    depth of funding that only the wholesale market can provide. Our main
    wholesale funder, to date, has been AMS (NZ) Limited an Australian
    wholesale funder. From this week we have an additional funder, Origin
    (NZ) Limited, a wholly owned subsidiary of the ANZ Bank. We welcome our
    additional funder as it will enable us to add several new mortgage
    products to our current range. It is our aim at Cairns Lockie to have
    one of the most extensive ranges of residential mortgage offerings in
    the market. We are nearly there and have some more developments coming.


    What is New

    With an additional wholesale funder on board, our product offering has
    increased and this will be revealed over the next few weeks. Here are
    three:
    " Our maximum exposure on a single dwelling was $750,000. We have
    now increased this to $2,000,000 (or beyond depending on the
    transaction). The borrower still has to show they can service that
    amount.
    " Increasing our exposure to individual borrowers over several
    properties from around $1.0 -1.5 million to around $3.0 -3.5 million.
    This is important as it enables us to advance more funds to a number of
    our existing clients.
    " Greater latitude to lend on a number of residential properties
    including lifestyle blocks and inner city apartments.
    We welcome your enquiries.


    First Home Buyers Have It Tough

    One of the unseen consequences of mortgage increases is that it is
    making harder for first home buyers, particularly those with a single
    income. Six months ago, a first home buyer was able to borrow at around
    7.0%, but now the rate has increased to 8.5%. On a $200,000 mortgage for
    a 25 year term, repayments will have increased around $200 per month. At
    the same time houses over the past six months have not dropped in value,
    they have actually increased, even in a higher interest rate
    environment. The Governor of the Reserve Bank, in his move to slow the
    economy, is actually hurting a group that wants to purchase an owner
    occupied property. This group is not speculating on rental property,
    they are not into excessive personal consumption as they are actually
    saving their deposit, they are an unseen group, being hurt by rising
    mortgage rates and house prices.


    Depreciation Rules May Change

    One of the tax advantages of owning residential rental properties is
    that you can make tax deductible allowances for depreciation. Some are
    arguing that given properties seldom drop in value, giving an allowance
    for depreciation does not make a lot of sense. The rates applicable for
    chattel depreciation for rental properties is similarly under review.
    There is an opportunity for the public to have their say. We suggest
    that concerned property investors make a submission to the Inland
    Revenue. Submissions close on 30 September 2004. Depreciation is an
    important issue with property investors. If a hard line is taken it may
    reduce the numbers willing to invest in this area and may prevent some
    landlords carrying out improvements, particularly to kitchen and
    bathrooms which do depreciate over time.


    Our current mortgage interest rates are as follows

    Variable rate 8.15%

    No Financials Home Loan 9.15

    Jumbo Loan 8.15

    Quick Start Home Loan 7.65

    One-year fixed rate 7.96
    Two-year fixed rate 7.87
    Three-year fixed rate 7.94
    Five-year fixed rate 7.96

    Line of credit facility 8.25

    Regards
    William Cairns
    James Lockie

    Cairns Lockie Limited
    321 Great South Road, Greenlane, Auckland
    PO Box 74-212, Market Road, Auckland
    Telephone (09 526 2000
    Facsimile (09) 579 7795
    Website http://www.emortgage.co.nz

    Regards
    "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
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