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19 April 2008

FED Drops .75%

The U.S. Federal Reserve cut its key lending rate by three-quarters of a point, which isn't as deep as some analysts had been expecting. News Staff

U.S. Federal Reserve Chairman Ben Bernanke pauses as he speaks at the National Community Reinvestment Coalition's annual conference in Washington on Friday, March 14, 2008. (AP / Pablo Martinez Monsivais)

U.S. Federal Reserve Chairman Ben Bernanke pauses as he speaks at the National Community Reinvestment Coalition's annual conference in Washington on Friday, March 14, 2008. (AP / Pablo Martinez Monsivais)

"Today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity," the Fed said in a statement issued Tuesday.

"However, downside risks to growth remain. The committee will act in a timely manner as needed to promote sustainable economic growth and price stability."

The federal funds rate, which is what banks charge each other for overnight loans, had been three per cent. Tuesday's cut reduces that to 2.25 per cent. The Bank of Canada's equivalent is 3.5 per cent.

The U.S. rate is now at its lowest point since 2004.

Stock markets lost some steam after the announcement.


David Kendall
Senior Mortgage Consultant

Land Transfer Tax for First Time Homebuyers

I was asked a question regarding land transfer tax for first time home buyers……

Eligibility is for any property now including, New Construction and resale properties.

But note that there is a maximum on this……

They have to pay for it up front and can apply for a refund of up to a maximum of $2000.00

The above link is the official explanation of the program.


David Kendall

Senior Mortgage Consultant

Thinking about becoming a snowbird? Things you should be aware of.

Interest rates continue to hold steady with every one waiting with anticipation for the next drop in rates by the Bank of Canada on April 22, 2008. So far it looks like things have settled down a little and the previous 1/2% target may get down graded to a 1/4%, but either way it is still going down. I will let you know on the 22nd what happens.

Recently I have had several of my client's asking about the possibility of purchasing homes in Florida, as prices in the US continue to drop.

I came across this article in the Toronto Sun this morning and thought it would be of interest to those who are thinking about theses warm winter nights watching the sun set over the Gulf of Mexico . Not that I am a regular reader of the Toronto Sun, but their Money section occasionally has some interesting articles you don't find in the other papers.

Buying property in the U.S. isn't like buying property in Canada. There are many rules you need to be aware of when investing in the U.S. For example:

If you plan on renting out the property you buy part of the year, you must have American Social Security Number and file a U.S. tax return.

You will have to pay higher property taxes in Florida if you are not a permanent resident.

You have to pay a 45% estate tax on your American property if your worldwide assets are more than $2 million when you die.

You also have to pay a gift tax ranging between 18% and 48% when you pass the property on to your survivors.

Each state has different rules about withholding tax if you sell the property as a foreign owner.

In addition, you are taking on a huge currency risk. If the Canadian dollar goes back down in value against the U.S. dollar again, you will be taking a hit on the value of the home you buy.

The bottom line is that while it may seem to be an attractive time to buy in the U.S., you need to get professional advice from experts who know both Canadian and American tax, estate and real estate laws.

While it would be nice to enjoy an Oceanside condo each winter, you wouldn't want any nasty financial surprises to take the joy out of your purchase.


David Kendall
Senior Mortgage Consultant

PRIME could be falling by up to .75% between April 22 and June 10

Get your variable rate mortgages in place .....

Canada Inflation Falls to 14-Month Low on Car Prices (Update3)

By Theophilos Argitis

April 17 (Bloomberg) -- Canada's annual inflation rate was the slowest since January 2007 last month as prices for automobiles dropped, giving the central bank room to lower interest rates for a fourth straight meeting next week.

Inflation stayed below the Bank of Canada's target as consumer prices rose

<> 1.4 percent in
March, slower than the 1.8 percent pace the month before, Statistics Canada

said <> today in Ottawa.

Economists forecast a 1.5 percent inflation rate, the median of 24 estimates.

Slower inflation has given the Bank of Canada flexibility to lower borrowing costs in the face of a possible recession in the U.S., Canada's main export market, even as other nations see food and energy costs rising. The world's eighth-biggest economy is benefiting from a strong currency, making imports cheaper.

``There are no inflationary pressures in Canada, despite all the great deal of attention to commodity prices and energy prices,'' said Carlos Leitao

=wnnis&sort=date:D:S:d1> ,

chief economist at Laurentian Bank Securities Inc. in Montreal. ``That guarantees we are going to have a 50 basis point'' reduction next week.

Annual consumer price inflation in the U.S. was 4 percent in March, almost triple the pace in Canada, on energy costs, the Labor Department said yesterday in Washington. Crude oil today climbed to $115.54 a barrel in New York, the highest since futures began trading in 1983.

The Bank of Canada last month reduced the benchmark rate by 50 basis points to 3.5 percent and economists expect it will cut another 75 basis points over decisions on April 22 and June 10.


David Kendall
Senior Mortgage Consultant

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