Lowering interest rates on GICs | GIC discussions | Discussion forum

CHUCK21 said
HELLO DOUG,
AS ALWAYS YOUR UNDERSTANDING AND KNOWLEDGE IS APPRECIATED. OUT OF CURIOSITY ARE OR WERE YOU IN A FINANCIAL BUSINESS?
YES, I FOUND PEOPLES' PROMO AND MAY USE IT AS I'M ALREADY A MEMBER. I WILL BE LOOKING INTO HSBC NOW THAT I KNOW ABOUT IT.
THANKS AGAIN  

Oh, if you've already got a Peoples Trust Company account, should be able to open an online 15-month GIC almost instantly then. That's good. As they're a small FI, I would recommend staying within your CDIC limit, though.

Yes, I worked for HSBC Bank Canada at their downtown Kelowna (2008-09) and Westbank branches (2009-2014) as a Personal Banker (CSR). HSBC occasionally has decent promo rates on GICs, but I wouldn't touch their savings account as they often have only time-limited, new customer only promos. Their regular GIC rates are usually lower than even the "Big 5" banks. If you live outside the major metropolitan cities, access to an HSBC branch can be problematic, if you prefer to deal face-to-face. Those would be my only concerns.

Cheers,
Doug

hotmony said

Years ago when they got started they held a mortgage on the Sundowner strip club in Niagara i was like yikes but they seem to have done ok sorta one of the earlier success stories after the last real estate downturn. A lot of seniors got burned in direct mortgage pools in the past. To the industry they will never ever forget. They currently yield 10-12% before fees what does that say..  

I agree with that. While well-intentioned in that I don't think they're Ponzi schemes or anything, the alternative, non-bank mortgage lending market (i.e., mortgage investment corporations) definitely has its ups and downs. For instance, I just happened to look up All Canadian Investment Corporation, which was based in Salmon Arm, B.C., and was a bit surprised to learn they'd gone bankrupt. They'd held a very long track record (probably close to 30 years) of offering consistent 7-9% annualized returns since inception. I guess it works, until it doesn't. However, I suspect a lot of the recent macro prudential regulatory changes that the federal Minister of Finance (Conservative and Liberal) and OSFI have made have done a number on them.

There are other alternative, non-bank lenders that you could look at (i.e., First National Financial Corp., which is the country's largest at nearly $100 billion in mortgages under administration, most of which are securitized off-balance sheet and they collect some nominal fees for administering them) or MCAN Mortgage Corp., but keep in mind you are buying the equity in the corporation much like you'd be buying equity in Equitable Group or Home Capital Group, parents of Equitable Bank/Equitable Trust and Home Trust/Home Bank, respectively.

Cheers,
Doug

hotmony said
Doug ur long-winded sometimes no offence cut to the chase  

I know, sorry.

Cheers,
Doug

CHUCK21 said
THANKS, I'M GETTING A LITTLE TWITCHY ABOUT MY MCOC ACCOUNT NOW AND WILL HALVE MY INVESTMENT. YOU'VE ALL BEEN HELPFUL.  

Thanks, Chuck, glad we could help.

What's MCOC? I assume a mortgage investment corp?

Cheers,
Doug

CHUCK21 said
HI DOUG,
IT'S MORTGAGE COMPANY OF CANADA INC. THEY'VE BEEN SHOWING A 9.3 PERCENT RETURN. I'VE JUST BEEN TOLD THAT IT WILL TAKE 60 DAYS TO GET A PORTION OF MY FUNDS OUT.
ANOTHER QUESTION PLEASE, IS A GIC PART OF THE 100K CDIC INSURANCE.  

Hi Chuck, yeah, the MICs can have liquidity issues withdrawing your funds, especially when they're challenged. If you can get your funds out in 60 days, that's not bad.

Yes, GICs are part of your CDIC insurance limit. CDIC insurance is per depositor at CDIC member issuer. For greater clarity and certainty, I could have 10 GICs, 3 savings accounts, and a chequing account, in my own name with a single CDIC member and they'd be insured together for CDIC purposes.

Any savings accounts and GICs you have in an RRSP are insured separately from your non-registered savings accounts and GICs.

If you have a RRIF or a TFSA, those, too, are insured separately from your non-registered and RRSP CDIC deposit insurance limits.

You can also have a bank draft outstanding for $100,000, which is insured separately, though it's not immediately clear how CDIC tracks this because you could have two different customers make two drafts payable to the same person and not know what the other customer is doing. I assume CDIC uses the bank draft serial number for the purposes of CDIC insurance. Downside of this is that an uncashed bank draft bears no interest, but if your concern was CDIC insurance on everything, that's one possibility.

Also, if you have a joint account with a family member, that's insured separately, too. Similarly, many FIs have two or more different subsidiaries (especially the "Big 5") so it's often possible to have millions of dollars CDIC insured by tactically placing those deposits into different ownerships, different types of accounts (registered and non-registered), and in different institutions owned by the same company.

Cheers,
Doug

GIC rates continue to move down.
Rapport Credit Union (Ontario) 1 year GIC down from 3.10% to 2.10%!
Habib Canadian Bank 1 year GIC down from 2.80% to 2.50% through agent or 2.45% direct.