Change in Residential Mortgage Rates TD Canada Trust

Change in Residential Mortgage Rates

Effective December 11, 2008, mortgage rates have decreased as follows:

Term	Rate		Change
6-month convertible	5.90		-0.20
1-year open	8.55		N/C
1-year closed	5.60		N/C
2-year closed	6.25		-0.20
3-year closed	6.25		-0.20
4-year closed	6.09		-0.20
5-year closed	6.75		-0.20
6-year closed	7.00		-0.20
7-year closed	7.20		-0.20
10-year closed	7.55		-0.20
5- year Special	5.59		-0.20
Variable Interest Rate Mortgages	TD Mortgage Prime	Variance	Rate
Closed VIRM: Rate is TD Mortgage Prime + 0.60%	4.00	+0.60	4.60
Open VIRM: Rate is TD Mortgage Prime + 0.85%	4.00	+0.85	4.85
Home Equity Line of Credit	TD Prime	Variance	Rate
Float: Rate is TD Prime + 1.00%	3.50	+1.00	4.50

Home Buyers’ Plan (HBP) RRSP Withdraw for First Time Home Buyers

Lately I have come across a higher number of clients who are interested in the RRSP early withdraw plan for first time home buyers. This week I will focus on Home Buyers Plan, and some tips that clients have found useful.

The Home Buying Plan is a great way to help you acquire the necessary down payment to afford a home, the benefit is that you are really borrowing from yourself  interest free!  The loan from your RRSP’s must be repaid within 15 years and can be set at varying lengths of amortization depending on the institution who is providing the loan. Do not attempt to pay the loan off in 1-2 years,  we have all been taught to be adverse with debt but opting to pay off the loan in 1-2 years can lead to serious cash flow problems, and financial upset.

Because the loans are on the total principle withdraw from the RRSP they can easily add up. Understand that you are not paying any interest on this loan but if you take a $15,000 RRSP loan out and take a two year repayment the monthly payment will be $625 high enough to seriously disrupt your cash flow, but if you take a 5 year repayment it becomes a more manageable $250 per month

Today’s topic is the conditions for the HBP, one of the most important things to ensure is that you must be a first-time home buyer. Several files that have crossed my desk recently I have had a number of folks who whish to use the program but have obviously purchased quite a number of homes before, this will not fly with CRA.

Below are the conditions that the CRA presents for participation

Conditions for participating in the HBP

Only the individual who is entitled to receive payments from the RRSP (the annuitant) can withdraw funds from an RRSP. You can make withdrawals from more than one RRSP as long as you are the annuitant (plan owner) of each RRSP. Your RRSP issuer will not withhold tax on these amounts.

Generally, you will not be allowed to withdraw funds from a locked-in RRSP.

To participate in the HBP, ONE of the following conditions must apply:

* You are withdrawing funds to buy or build a home for yourself as a first-time home buyer.

or

•    You are withdrawing funds to buy or build a home for a related person with a disability .
•
In addition, ALL of the following conditions must apply:

* You must enter into a written agreement (Offer of purchase) to buy or build a qualifying home. The agreement may be with a builder or contractor, or with a realtor or private seller. Obtaining a pre-approved mortgage does not satisfy this condition.
* You intend to occupy the qualifying home as your principal place of residence.
* Your repayable HBP balance on January 1 of the year of the withdrawal is zero.
* Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.
* You are a resident of Canada.
* You buy or build the qualifying home before October 1 of the year after the year of withdrawal.

You are responsible for making sure that all HBP conditions that apply to your situation are met.

If a condition is not met while you are participating in the plan, your RRSP withdrawal will not be considered eligible. You will have to include the RRSP withdrawal as income on your income tax return for the year you received the funds.

If you do not meet the conditions to participate in the HBP in the current year, you may be able to participate at a later date.

Canadian banks ranked soundest in the world

Canada has the world’s soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as a financial crisis and bank failures shake world markets.

Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after its government pledged the equivalent of $97 billion Cdn this week to bolster bank balance sheets.

The United States, where some of Wall Street’s biggest financial names have collapsed in recent weeks, rated only 40th, just behind Germany, at 39th, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.

On Thursday, the U.S. was considering buying a slice of debt-laden banks to inject trust back into lending between financial institutions now too wary of one another to lend.

The World Economic Forum’s Global Competitiveness Report based its findings on opinions of executives and assigned banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).

Canadian banks received a score of 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).

U.K. banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness while Switzerland’s banking system scored the same in 16th place, as did Singapore (13th).

The ranking index was released as central banks in Europe, the U.S., China, Canada, Sweden and Switzerland slashed interest rates in a bid to end panic selling on markets and restore trust in the shaken banking system.

It is certanly reasuring to be a proud part of a sound economic banking system. Canada’s banking system has been underrated for years, TD Canada Trust is infact the 5th largest Bank in America, yes you read that correctly in America! It has very strong US base with TD BankNorth group, and is infact the namesake of the Celtic’s home in Boston MA !!!

TDdave

Bank of Canada’s half-point cut becomes a quarter-point cut for borrowers

Canada’s central bank moved Wednesday to cut short-term interest rates by half a percentage point, but Canadian banks are cutting rates only half that much.

Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and TD Canada Trust said they will trim their prime lending rates by 25 basis points — meaning a quarter of a percentage point — effective Thursday.

The prime lending rate is what banks charge credit-worthy business customers on short-term loans. Other interest rates, including certain mortgage rates, may be linked to the prime rate but set several points higher.

Tim Hockey, CEO of TD Canada Trust, issued a statement saying his bank is doing its best to help the central bank.

“Continuing market turmoil has steadily driven up the cost of borrowing for financial institutions. This makes it challenging to match the Bank of Canada rate cut at this time,” he said.

“We recognize the efforts the Bank of Canada is making and, despite the fact that our cost of funds remains high, we have decided to reduce our rate by 25 basis points. We see this as a balanced move in managing our funds and passing along the intended benefits to our customers.”

The other banks issued one-sentence notes saying they will cut their prime rates to 4.5 per cent from 4.75 per cent, the same cut announced by TD.

The Bank of Canada, in a move co-ordinated with the U.S. Federal Reserve and other central banks, cut its target for the overnight rate half of a percentage point to 2.5 per cent. The central bank describes that rate as its key policy interest rate, signalling its intentions to credit markets.

http://www.cbc.ca/money/story/2008/10/08/prime-rate.html?ref=rss&loomia_si=t

TD Canada Trust is leading the way for lending practices in Canada, with the ripple effects from Global Economic concerns tricling down it is interesting to note why the banks are only following with half of the centeral banks discount.

Liquidity on the international market has lead to higher expectations for for gin investors, simply put for gin investors want a higher return on lending funds to Banks- this premium demand has forced the Canadain banks to pay higher returns in exchange for forgin cash infusions. This has the bank changing it’s pricing policys in these unprecedented times. It will be interesting to watch what other actions will be taken in the near future with regards to Mortgage rates and HELOC produts from all of the Canadian lending institutions.