HomeTrust On Sale (Oaken Financial) | Page 6 | Oaken Financial | Discussion forum

I don't think we should assume we know what GIC investors will do.

Some people just let their GICs roll over because they forgot, had no other plan, or became cognitively impaired in the interim.

Some will consciously let them roll over because the current rate offered is good and they either don't think HCG will fail or know they are well covered by CDIC and think rates will likely go up anyway so they can do at least as well elsewhere if push comes to shove. There seems to be a bit of a consensus that the most likely scenario may be a takeover, which is just fine with GIC investors.

On the other hand, Oaken is one of the few FIs which pro-actively asks you, when you take out a GIC with them, what you want done with it when it matures. Rollover is only automatic if you set it up that way intentionally. Of course, you can always reverse your decision. For non-registered GICs, if you choose in advance not to roll over, the money goes back to its source automatically.

I have GICs there, but none maturing in the foreseeable future. If they were, I would not rule out rolling them over. Where else would I get a better rate? They're all CDIC protected. And I think that if HCG doesn't survive, another FI will take over the GIC obligations.

It's true that GIC investors may be risk averse. However, for many it is just a piece of their overall portfolio, some of which is significantly riskier. Further, the kind of person who seeks out an alternative bank is probably better informed than the majority and may have a more shrewd analysis of risk and reward. The details will of course vary with the individual.

I am as risk averse as any (as regular readers will know), and I would not rule out another Oaken GIC. It's all about the rate, as usual. Any bank could collapse unexpectedly due to things unforeseen or undisclosed, but we happen to know more about this one as it's been thoroughly raked over by the short sellers. I hope HCG survives, just to spite them. I'm not worried about my own GICs as they will be covered one way or another. The risk of needing CDIC bailout is small from what I can see, and, if it comes to that, CDIC claims to have speeded up its processes for reimbursement over what they were 30 years ago.
If HCG is allowed to fail, other walls will also shudder. Nobody of good faith wants this, I don't think, least of all the minister of finance, who would then have a new mortgage headache on his hands; only the short sellers want it as far as I can see.

I claim no special expertise. Just my opinion as a lay person in these matters

It will be interesting to see if any other FIs feel the need to increase their rates.

Perhaps I'm wrong, but as I understood it from earlier information, the default rate on these unwanted mortgages was very low.
Surely there is some capitalist out there who understands that mortgages that other people don't want which are being paid down are a good deal?
Are these first, or second, or third , or do we even know? It makes a difference. If they are second or third, perhaps the real issue is fear of a declining housing market.
A mortgage that is secured by a house is usually a pretty good deal for an investor.

It will probably take until next week to know if the increase in GIC rates will result in more deposits, by the time people get their money moved around. Good deals for some. If they default, you won't have lost hardly anything because you won't have held it very long before CDIC jumps in, and they will pay the rate up to date of default. And if they do make it, or another FI takes it over, you win with the higher rate.

There may not be any free chocolates next Christmas, however.

I am a newly registered user and first time poster, not a troll.

We have several registered GICs at Oaken maturing this year and next, all within CDIC limits. I am not concerned about losing the principal, but here are a couple of things I haven't seen discussed:

CDIC guarantees the principal, but does it also guarantee the interest due at maturity?

Suppose HC gets taken over by another FI. Presumably they would honour existing GIC rates until maturity. But what about Oaken's free transfer out policy? New FI owner could demand transfer out fees like all big banks do. Then you have to decide between probable lower interest rates and transfer out fees.

This may require another phone call. I am unclear what "set the rules" might entail. If they are going to change the terms (i.e. rate), then it seems to me that means a new GIC contract and therefore the customer would be able to say "no thanks" and walk away with their money. Logic may have nothing to do with it, but I think we need more clarity on the scope of the new owner.

I am not a lawyer, but it seems to me that in other areas, when a company acquires another, they acquire the whole shebang, assets and liabilities, as such. They may "set the rules" in terms of selling some of them off, negotiating new terms after the current obligations end, etc., but I don't see how they can mess with the existing obligations. My opinion only.