Hi All,
Welcome to the April Newsletter,
It is getting boring to open each months newsletter with news of an interest rate rise, but that seems to be the pattern. Another .25 was announced on Tuesday bringing it up to 4.25%.
Rates and stuff
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Another .25 increase brings the cash rate to 4.25%. This is the fifth rate rise in seven months. Bringing the average home mortgage to mid 6's. And there is predictions from the treasury of more to come.
The first instinct for many people at times like this is to seek out a fixed rate. The current three-year benchmark fixed rate is 7.65 percent - compared with the average variable rate of 6.63%. To do the maths it would have to rise the next 100 points very quickly within the next 6 - 8 months for a fixed rate to pay off. Again I am not in the business of predictions, but historically, a fixed rate is rarely financially advantageous but has the main advantage of providing peace of mind.
Peace of mind is a very useful thing to have. A survey from last week reported that we now have the same degree of mortgage stress and concerns over debt than we had at the time of the Financial Crisis.
Blues and News
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As the rattle and hum of the Blues Fest settles over the Myocum hills, its timely to ponder whats happening in the market.
The anticipated property jump that sellers and agents are waiting on with bated breath has not yet arrived. With all the froth and excitement happening in the southern cities like Melbourne and Sydney there was an expectation that we would see a sharp upturn here.
As always - its patchy. Lower end property in places like Ocean Shores and Mullumbimby are still fairly strong. There is an excess of properties in the $800,000 to $1.5M bracket and there are lots to choose from for the discerning buyer. Except for a small number of multi-million dollar sales, top end remains very flat with not many champage corks popping in our beautiful hills.
Land Value Hikes
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I was interested in studying this graph supplied by Byron Council and printed in the Echo.
It shows the increase in land values from 2006 to 2009 as determined by the NSW Valuer-General. These figures are used by council to set their rates and also used by Office of State Revenue to bill you for land tax. Although not a direct indications of house prices it can be an indicator of what areas have been moving.
We can see the big winners in the last 3 years have been Bangalow with a massive 51% increase and Main Arm and Myocum with 40%. As I said, I am not in the business of predictions but property is usually cyclical in nature so the areas of interest to me would be the ones with the least movement and the potential for more growth in the short term. They are Brunswick Heads, Byron Bay, New Brighton and South Golden Beach. All with increases below 10% and well below the average increase 17.08%.
That's all for now. I look forward to being of service for all of your property and finance requirements. Especially if you are one of the people experiencing mortgage stress as I may be able to help.
All the best,
Michael Murray