Brokers may ultimately have to thank RBC for shooting holes in BMO’s 2.99% – the biggest of Canada’s big banks running ads critical of the no-frills mortgage.
“What good is a low rate mortgage without the frills?” asks an RBC full-pager running in a national daily. “Switch to RBC Royal Bank and get a 2.99% fixed-rate mortgage with all the frills.”
Aside from that last bit – the plug for RBC’s four-year fixed – the message amplifies the one mortgage brokers have struggled to get out to consumers.
They’ve used it to retain clients looking for BMO’s same rock-bottom rate, but unaware of the even lower prepayment privileges and the restrictive 25-year amortization.
The Bank of Canada kept its benchmark interest rate at a record low last Thursday, but surprised with slightly cheerier commentary that has economists wondering whether the central bank has brightened up enough to entertain a rate hike sooner rather than later.
Mark Carney, Governor of the Bank of Canada, highlighted an improving near-term outlook in pretty much every category of concern in his January rate decision, including the European credit crisis, the US economic recovery, global financial markets and the health of the Canadian economy.
“The heightened uncertainty around the global economic outlook has decreased in the weeks since the Bank released its January monetary policy report (MPR),” the bank said in a release explaining its rate decision. “Recent developments suggest that the outlook for the Canadian economy is marginally improved from the January MPR.”
Carney said the economy will likely grow faster than forecast in the first quarter due to temporary factors, but underlying momentum still points to an expected year of middling growth.
Click here for full details from the Financial Post.
The coming 2012 federal budget won’t include any “draconian” measures because Canada is in a better fiscal position than many other nations, Finance Minister Jim Flaherty said.
Flaherty was speaking to reporters in Ottawa after meeting with economists to solicit their opinions on a number of economic issues ahead of the budget.
He gave scant details about the 2012 federal budget, due to be released on March 29th.
“The government of Canada is in a relatively good fiscal situation, so we don’t need to be draconian. We’re not the government of the United Kingdom, we’re not in a situation thank goodness like Greece and Portugal and some other countries,” Flaherty said.
There’s one piece of good news about mortgage prepayment penalties: The cost of the penalty can be used as a tax deduction if you’re breaking your mortgage to move 40 km or more to be closer to work.
The Canada Revenue Agency has a provision that allows you to deduct the costs of moving if you’re doing so for a job or for full-time study at a university, college or other type of course at a post-secondary level.
You can claim other costs associated with selling your old residence as well: advertising, notary or legal fees, real estate commission as well as that dratted mortgage penalty “when the mortgage is paid off before maturity.”
Keep the receipts and fill out form T1-M Moving Expenses Deduction. For tax purposes, the mortgage penalties get lumped under “other selling costs, specify” on Line 16 of the T1-M form.