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your mid-week mortgage market minute
with Jim Cook, Broker
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in the mortgage marketplace ...
Two things today - first, I imagine folks were very happy with StatCan reporting a continued easing of inflation in a report issued yesterday.  Economists were expecting an increase, so this was a pleasant surprise.  Bond markets immediately reacted with a small decline in yields.  This will take some pressure of fixed mortgage rate pricing and will raise expectations for an early summer drop in Prime rate.  Let's see how the talking heads address this in the coming weeks.

Today, I want to highlight a new CRA policy around 'bare trust' reporting.  If you want to deepen relationships within your client base, this is an opportunity to reach out to anyone who has cosigned a mortgage in the last 3-5 years to ensure they know about this policy change.  You could, quite literally, be saving them thousands of dollars with an email or phone call - recommending they reach out to their accountant.  You have a significant opportunity to stand out from your peers with a short email.

Some examples of bare trusts include:
  • a parent co-signing a mortgage for their child and going on the title
  • a parent or grandparent who has an account for a minor child or grandchild
  • an adult child with joint ownership of their parent’s bank account, investments or real estate for estate planning purposes
In simple terms, CRA staff changed policies around trust reporting, including bare trusts, targeting trust cheaters.  Unfortunately, in the framing of the policy, there are some unintended consequences - including for those who have cosigned a mortgage.  If someone cosigned a mortgage and is on title to the property, then it is most likely a bare trust.   Starting with the 2023 tax year, those folks are now required to file a T3 Trust Return.  Penalties for not filing start at $25 per day, minimum $100 to a maximum of $2500.  There is a one year moratorium on penalties - with CRA viewing this as an education year.  Filing deadline for this year is April 2nd.

What I am doing with my clients is reaching out by phone and email, with a short summary and recommending they speak to their accountant.  After an hour talking with lawyers and tax/trust specialist accountants, I'm only clear on one thing - this is a complicated and nuanced issue in most areas - so I'm not offering one lick of advice - simply raising awareness and pointing them to their tax accountant!  (If you want my script/template, lmk)

I'm also including the following articles/links:
rate snapshot ...
No overall change in rates - yet. Unfortunately, the sweet spot 3 yr term rate hasn't budged.  For properties priced below $1 million, with less than 20% down payment, example rates would be:
  • 1 yr fixed  6.64% or $6.78 per $1k in mortgage
  • 3 yr fixed  5.14% or $5.90 per $1k in mortgage
  • 5 yr fixed  4.99% or $5.81 per $1k in mortgage
For clarity, a $500,000 at 5.09% on a 25 yr amortization would have payments of 500 x 5.87 = $2,935 monthly.

Note also that rates can change daily, certainly differ between lenders and definitely differ based on down payment, mortgage features and hidden costs.
in Jim's practice ...
Let's just say - WOW - the early spring market seems to be underway!  Happy Spring Indeed!

And, it's also been a special time with both family members and referral partners reaching out for counsel on their own personal business.  I try never to forget to appreciate the trust and support placed in our office.

Have a successful week!  
Great experience with Jim. His professionalism made a challenging time  that much easier to navigate. He will always be our first call when it comes to any mortgage issues

(PL, Jan 2024)
chatwithjim.ca

the best place to refer clients to get questions answered quickly!  No Phone Tag.  They book directly into my calendar to schedule a call!
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Jim Cook is a nationally-recognized broker with some quarter billion in mortgages funded. 
www.mymortgageplace.ca          519-832-7882            chatwithjim.ca
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