Property round up: NSW overhauls stamp duty, NAB increases rates
There’s been a couple of fairly big property-related announcements recently, including a stamp duty overhaul in NSW and NAB increasing interest rates. Let’s break down what they could mean for you.
NSW stamp duty overhaul
First, let’s start with the good.
The NSW Government recently announced it will peg stamp duty to the rate of inflation. It’s the first state to do so after leaving its current system largely unchanged for over 30 years.
In a nutshell, the seven different price brackets that determine how much stamp duty NSW homebuyers pay will be adjusted to the Consumer Price Index (CPI).
Why does this matter?
Well, over the past 15 years the average rate of stamp duty in NSW rose from 3.37 per cent to 4.05 per cent.
At the same time, the median house price in Sydney rose from around $400,000 to $1 million.
The NSW government says the changes, which are effective from July 1, will ensure the tax on housing does not continue to grow.
The immediate savings will be “modest” – think in the ballpark of $500 by 2021 – but they will become more substantial for home buyers over the long run.
A couple of quick examples to break it down
If stamp duty brackets had been indexed to CPI 15 years ago, for example, the amount payable on a $500,000 home would be around $2000 lower today.
Meanwhile, the amount payable on a $1.5 million home would be around $6400 lower.
“Whether you are a first homebuyer, a downsizer or upgrading to the family home you will ultimately benefit as a result of this reform,” says NSW Treasurer Dominic Perrottet.
So will other states follow suit? Well, that remains to be seen, but this is a great first step.
NAB Increases mortgage rates for new borrowers
Ok, now time for the not-so-good news.
The National Australia Bank (NAB) recently announced it’s slashing the discount offered to new borrowers from 0.48% to 0.30%.
That effectively translates to a rate of 3.87%, up from 3.69%.
The new rate applies to all new principal and interest loan customers. The good news is that NAB has committed to keeping its standard variable rate on hold for existing customers for as long as is reasonably possible.
NAB’s move comes just two months after Westpac, CBA and ANZ raised their own interest rates.
At the time, NAB said it wouldn’t raise rates so that it could rebuild trust with customers following the Royal Commission report into mortgage lending practices.
The big question is: will the other banks follow suit once again and increase rates further? That remains to be seen, but the message is clear: interest rates are going up.
Actions you can take to combat rising interest rates include shopping around, locking in a rate, or consolidating your debts.
If you’d like help putting any of the above strategies into place, get in touch with us today. We’d love to help out.
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