Page 32 - Sports Energy News, Cornwall, Issue No 95

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Issue #95 December 2020
32 Issue #95 December 2020 www.sportsenergynews.com.com
S ines the Spotlight on

Neighbourly Advice From Our Local Professionals

or nephews. This program is one of a few that made, it is very important to understand what you
Max Ming
allows invested money to accumulate and defer own in your RESP (as there are many options).
Investment Advisor taxation at the hands of the beneficiary. The fact Work with your financial advisor to make sure
that the government contributes a grant each year you are capitalizing on all the government grants TALENT
Gift of Education 1397 Brookdale Ave., Cornwall
eading into the holiday season, those who are just adds to the already outstanding benefits of it. available and making tax efficient decisions when
Hfortunate enough to purchase gifts for their The Canada Education Savings Grant (CESG) it is time to withdraw the money.
loved ones are always searching for new ideas. gives 20% on the first $2,500 of contributions Helping a child fulfill their dream of higher
How about helping a child with their first big annually ($7,200 lifetime maximum) per child, for education is a wonderful gift and quite easy to
financial hurdle in life – post secondary education! a child under age 18, with the possibility of catch- do. If you would like more information on this
We all know that the cost of attending college up grants each year. This means the government program for a child or grandchild, please feel free Collectors Edition
or university has been steadily rising. In the last will give you up to a $500 grant, per year, per child to give us a call.
15 years, the average yearly cost of tuition for post secondary education has and possibly more, depending on family income. Our entire team sends wishes of health and
increased by nearly 35% and continues to climb. By contributing to a child or By putting small amounts of money away each happiness to you and your loved ones this holiday
grandchild’s education savings each year, you can rest assured you will have year for your child, and capitalizing on government season, Merry Christmas!
them on the right track. grants, you are putting your child in the best
possible position to tackle the financial burden of
In Canada, we are very fortunate to have the Registered Education Savings post secondary education. As with any investment
Plan (RESP) program, which you can set up for your child, grandchild, nieces,

costs, but in a seller’s market such as we are Even if you end up with more than one offer
By Michael VanderMeer having this year, most sellers are leaving on a private sale, it will not sell as high as
Real Estate Agent
money on the table when selling privately. it would with a realtor, being exposed to the
Homes properly exposed on the market open market. On another note, private sellers
A BAD TIME TO SELL PRIVATELY through a realtor are getting well over asking could be opening themselves up to litigation
hether you are selling to a friend, family price and in most cases are covering the that could costs thousands of dollars whereas Brody
Wmember, or putting a private For Sale commission costs and putting extra money in with a realtor, they get the advice and
sign on your property, there has never been a the seller’s pocket. A private sale has limited protection they need to avoid such problems.
worse time to sell privately. Most people who exposure and will not attract as many buyers.
Fairbairn
sell privately do so to save the commission

concept based on demand of the free market, Instead, the BoC flooded the market with the
By Brian Johnston which changes based on the risk environ- cheapest money possible. Essentially, they
Mortgage Specialist ment. Except in a country that may have a provided a trap and inflated asset values as
housing bubble. Then, when demand evapo- unemployment increased. It’s one of the few
Bank of Canada Ending Pandemic Pro-
gram that Helped Real Estate Prices Surge rates due to risk, the government steps in. times in history this has occurred. Just how
On the day Canadian home sales and prices Last year, real estate markets began to see carried away did they get with purchasing
CMBs? The central bank now holds $9.32
hit record highs, the Bank of Canada an- sales volumes drop and price growth stall. billion of CMBs as of Oct 7, up 4.91% from
nounced an end to the program that is par- The BoC decided, for unrelated reasons a month before. This represents an increase
tially responsible for the surge. The Bank (wink, wink), that they would buy CMBs of 1,710.1% from the same week last year.
of Canada (BoC) flooded the market with to improve liquidity. “Improve liquidity” is To put it into context, from March to August
cheap mortgage credit in March. Recently, as bank-talk for “keep rates lower than the mar- this balance increased $8.10 billion. Total
market data showed a fever pitch had been ket wants them to be”. When a buyer picks Cornwall Wildcats
up any lack of demand, they prevent any in- mortgage credit growth only grew $42.10
reached during the “worst” recession in years, they committed to creases. This puts a cap on how much interest billion during this time. This shows how as-
stopping the program. The bond-buying program that helped drive paid can rise. There’s always a buyer willing tronomically large the scale of this operation
rapid price growth, came to an end Nov.1,2020. to buy in this case, so there’s no need to in- was, and understandably helped inflate asset Football Graduate
Canada Mortgage Bonds crease how much is offered. The purchases values.
First, a quick refresher (or intro) to Canada Mortgage Bonds (CMBs). climbed very slowly, as the weeks went on. The BoC announced they’ll put an end to
Lenders originate mortgages, pool them, then sell the pool as mort- When the pandemic struck, the BoC treated their mortgage bond hoarding. The central “University Bound”
gage backed securities (MBS) to the government. To pay for the CMBs like toilet paper and hand sanitizer – bank notified investors they’ll end their pro-
MBS, the government sells CMBs to investors to get the funds. The by hoarding. They began buying them on a gram on October 26, 2020. Without a surge
cash flow from the MBS, is then used to pay investors holding the competitive basis, meaning they didn’t just of deep pocketed investors looking for crap
CMBs. In other words, a CMB is a government-backed security for buy what couldn’t be sold - they actively yields, this will likely slow mortgage rates
mortgage financing in Canada. Easy, right? Totally obvious, and I’m competed with bidders, driving rates lower. from falling further. They did inject a lot of
sure you got that on the first read. Normally in periods of increased risk, fund- liquidity, so an increase may not be in the
These influence the cost of borrowing based on demand for these ing is supposed to become more expensive. cards for a while. However, they are still
bonds. When investor demand for CMBs rises, interest paid to inves- This lowers the risk of losses to households forecasting mortgage defaults will rise by
tors falls. When demand falls, interest paid should rise. It’s a simple multiples.
borrowing.