Welcome to the third Cairns Lockie MortgageCommentary for 2006. This is a fortnightly electronicnewsletter, which aims to keep you informed on developmentsat Cairns Lockie, Mortgage Bankers and the mortgage marketin general. Previous issues of this commentary can be foundon our website http://www.emortgage.co.nz/newsletters.htm

The MoneyMarket

This morning (8am on 10 March 2006) the moneymarkets were at the following levels:

Official cash rate 7.25% (unchanged) 90 day bill rate 7.56 (up from7.50) 1 year swap rate 7.35 (up from 7.33) 3 yearswap rate 6.80 (unchanged) 10 year bond rate 5.74 (upfrom 5.65) Kiwi dollar 0.6500 (down from 0.6587)

Market Slower but House Prices Remain Steady

The overallhousing market is beginning to slow as the recently releasedJanuary 2006 figures show, but interestingly prices remainsteady. House sales in January nationwide were 6,366dwellings sold, compared with 6,906 in December and 7,071 inJanuary 2005. Estate agents are commenting that the marketis quieter, with properties taking longer to sell, and fewerpeople attending open homes. Prices however seem to haveheld up. The median house price in January was just afraction over $300,000 after slipping in December to$295,000, but the same as the all-time high recorded lastNovember. This year will be quieter than last year but onething which will assist the property market is that mortgagerates have peaked. Good news yesterday for the market isthat the Governor of the Reserve Bank did not increase theOfficial Cash Rate.

The Kiwi Saver

The Kiwi Saver is aworkplace savings scheme which is expected to come in nextApril (2007). It will cover all work places regardless ofthe number of staff. Employees have a choice to contributeeither 4% or 8% of their taxable income. Savings areportable and locked away until retirement. There seems to usto be far more negatives with the scheme than positives. Theperformance of most superannuation schemes in recent yearshas been poor. How safe is your investment? Can thegovernment take your money to meet unpaid taxes or thecourts similarly when a case goes against you. Can you evadeyour creditors by locking your money away in this scheme?The only thing we like, is that first home buyers canwithdraw their funds to assist them when purchasing aproperty.

100% Home Loans Going Well

There seems to bemixed messages coming from Government circles on 100% homeloans. Kiwibank is currently offering them, yet the ReserveBank seems to be doing everything in its power to slow themortgage sector down. We offer 100% Home Loans and arefinding a steady demand for them. Initially they wereoffered to professional people on good incomes but we haveconsiderably widened our parameters to include the ordinaryperson (affordability is still important). We have, inaddition, extended the locations and now lend in many moreprovincial towns. We are keen to assist here as we believethat owning your own home is a sound strategy.

AnotherWellington Record

An Oriental Bay landmark, a wellpresented superior turn of the century villa locally knownas one of the seven sisters, recently sold for in excess of$3 million. The property sits in a prime location offeringwide views of both the harbour and the city. The propertywas originally purchased in 1995 for $930,000. The price maywell exceed the previous record sale price of a Seatounvilla once occupied by the former Prime Minister, NormanKirk which sold for $3.35 million last year.

Our currentmortgage interest rates are as follows:

Variable rate 9.20%

No Financials Home Loan 9.80

JumboLoan 9.20

Quick Start Home Loan 8.15

One-yearfixed rate 8.53 Two-year fixed rate 8.04 Three-year fixed rate 7.89 Five-yearfixed rate 7.89

Line of credit facility 9.30

Regards William Cairns JamesLockie

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