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Email this10:50 am
April 6, 2013
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Scotia iTRADE is offering 3.15% on five-year GIC's from related issuers:
- Bank of Nova Scotia
- ADS Canadian Bank
- Scotia Mortgage Corp
- Montreal Trust Co of Canada
- National Trust Co
5:35 pm
March 15, 2019
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Norman1 said
Scotia iTRADE is offering 3.15% on five-year GIC's from related issuers:
- Bank of Nova Scotia
- ADS Canadian Bank
- Scotia Mortgage Corp
- Montreal Trust Co of Canada
- National Trust Co
Us it available only through iTrade or is it also available in the branch as well?
6:06 pm
April 6, 2013
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I've only seen the 3.15% rate through Scotia iTRADE.
Scotiabank's GIC rates page shows a special 3.00% rate for their personal Non Redeemable GIC, up from the regular 1.80% rate.
Also saw a 3.10% rate at Scotia iTRADE for five-year GIC's from CIBC, Bank of Montreal, Royal Bank of Canada, and ICICI Bank Canada. But, Royal Bank's web site, for example, is advertising a special 5-year non-redeemable GIC rate of only 2½%, up from the regular 1¾% rate.
6:25 pm
January 13, 2022
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I don't mean to criticize anyone who is considering this. But I am curious...don't you think significantly higher rates are coming soon? Seems obvious to me, but would love to hear other's thoughts. I am getting 2.05 to 2.25 percent parked in temporary places, and I'm thinking that when I see 4 to 5 percent on 4 to 5 year GICs, I will pull the trigger.
1:00 am
October 21, 2013
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I'm waiting too, parked at Tandia CU 3% to end March and DUCA 2% to end July; looking for other options. I may put some in EQ 2.05 for 3 months if I get to it in time. I am not considering anything longer than 9 months at this time.
I utilize a GIC ladder. I have some flexibility with this as I can buy my GICs at any time during a given year. (I always have extra cash.) Also, if I think the situation warrants it, I may buy a bit more or a bit less in a given year. Last year I bought a bit less, and I will catch that up and be further ahead with it this year even with a four year GIC.
Feeding the ladder means I have to make an investment before the end of the year but I can choose my time. This year i will most likely wait until December. In 2020 I bought in early January at 3.25 as I expected rates to fall, which they did. Last year I waited til the end of the year as rates were rising. It keeps my income relatively even for tax purposes, and CRA doesn't care what time of year I buy my GICs. I'm a little more slack with registered funds, but they are less important to me..
While I do think rates will continue to rise and I wouldn't buy GICs now, I do think it's important to have some sort of deadline, not just keep postponing until some imagined rate appears. It may never appear, and you could end up waiting so long that it defeats your purpose as you've lost too much while waiting. I think it's important to pay attention to the momentum and to the calendar. Buy some every year, preferably about the same amount, and it will average out. I'm still getting 4%, 3.75%, 3.55%, 3.25% etc from GICs I bought in previous years. As a result, last year I received more in interest income than in any previous year despite rock bottom rates. This year may not be so good but it will pick up again next year with what I buy at the end of this year.
All of that said, there are people whom I don't consider to be fundamentally GIC investors. They are only going to buy when the rate hits X. I can't speak for them. The mindset is quite different. But I do think any target rate needs to be looked at in conjunction with inflation, not just as a goal in itself. 5% looks great from here, but not so great if inflation is 9% etc. Sometimes, in order to help deal with inflation as much as possible, you may need to wait a bit longer. It can be a tough call.
I'm not buying GICs now, but I do keep a close watch on rates in order to figure out best time to buy during the year.
10:15 am
January 13, 2022
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Loonie...thanks for that reply. Very interesting. I agree with your approach for the most part. In my case, we're talking mostly registered accounts. Close to pulling the pin on work for good, so little interest in equities at this stage of life. I too have relied on laddering, but I have virtually everything maturing this year, and lots matured in the last year. However, I'm holding off as central banks are clearly telegraphing lots of rate hikes on the way.
11:46 am
October 21, 2013
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That sounds like a good plan to me, given your circumstances. With registered funds, laddering is less crucial, but there could be increased risk from rate volatility if you don't. You may need to start over again with 1, 2, 3, 4, 5 year GICs although that can be painful in first couple of years but will be better for evening out renewals and better for your retirement income down the road. Depending on your age and retirement income, you will need to start thinking about how to minimize the clawbacks on the Age Amount and OAS, for which an even income is best in most but not all circumstances.
5:08 pm
January 12, 2019
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Norman1 said
Scotia iTRADE is offering 3.15% on five-year GIC's from related issuers:
- Bank of Nova Scotia
- ADS Canadian Bank
- Scotia Mortgage Corp
- Montreal Trust Co of Canada
- National Trust Co
.
The same/similar 5yr GIC rate is available through 'TD WebBroker', as well . . .
-
➡ MANULIFE BK
➡ HOMEEQUITY BANK
➡ ROYAL BANK OF CANADA
➡ MONTREAL TR CO CDA
➡ NATIONAL TR COMPANY
➡ BANK OF MONTREAL
➡ BANK OF NOVA SCOTIA
➡ etc. . . .
Things are looking Up ❗
- Dean
" Live Long, Healthy ... And Prosper! "
11:20 pm
October 21, 2013
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When so many Big Six are offering this relatively high rate, I would see it as a reason to wait for something better to come.
4:33 am
September 7, 2018
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Loonie said
When so many Big Six are offering this relatively high rate, I would see it as a reason to wait for something better to come.
I suspect that the Big Six are doing a rip roaring business on their mortgage loans due to the continuing hot real estate market across Canada. The Big Six are prepared to pay a bit more now to obtain funds - I would not be sure that something much better is going to happen. In the event real estate does not continue at the present hot pace, those GIC rates will not increase and may in fact pull back. Basic principle - Do not time the GIC market any more than timing the stock market.
9:49 am
January 12, 2019
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Loonie said
When so many Big Six are offering this relatively high rate, I would see it as a reason to wait for something better to come.
- Yup ⬆
With BoC rates expected to continue to go Up, I plan on staying 'Short' for a while.
Come the 4th quarter of this year, I'm guessing today's 5yr GIC rate @ ~3% will look like 'Chump Change'.
My Two Nickels,
- Dean
" Live Long, Healthy ... And Prosper! "
11:22 am
October 21, 2013
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canadian.100 said
I suspect that the Big Six are doing a rip roaring business on their mortgage loans due to the continuing hot real estate market across Canada. The Big Six are prepared to pay a bit more now to obtain funds - I would not be sure that something much better is going to happen. In the event real estate does not continue at the present hot pace, those GIC rates will not increase and may in fact pull back. Basic principle - Do not time the GIC market any more than timing the stock market.
Current mortgage rates don't appear to be supporting these GIC rates.
The highest five year mortgage at ratehub, for example, is 3.49%.
They may indeed be successful in selling these GICs , but didn't you yourself say recently that you thought people with money to spare would be holding off, and that you were waiting for 4%?
To say that rates won't likely go higher is the same as saying they won't in terms of "timing the market". Both are bets on future market activity.
Time will tell.
11:56 am
September 7, 2018
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Loonie said
Current mortgage rates don't appear to be supporting these GIC rates.
The highest five year mortgage at ratehub, for example, is 3.49%.They may indeed be successful in selling these GICs , but didn't you yourself say recently that you thought people with money to spare would be holding off, and that you were waiting for 4%?
To say that rates won't likely go higher is the same as saying they won't in terms of "timing the market". Both are bets on future market activity.
Time will tell.
Ratehub supposedly advertises the best i.e.lowest mortgage rates, I think from CUs and independents......but not necessarily the rate which the customer ultimately gets based on whether a first time buyer, a mortgage renewal, equity in the property, city and province of property etc. etc.
Mortgage rates advertised are all over the place - per Scotia's site, their rate for a 5 year FIXED is 4.99%, CIBC's rate for a 5 year FIXED is 4.79%, CWB 4.79% for a 5 year FIXED. Until one sits down and actually applies for a mortgage, one may not know the effective rate.
These posted big bank mortgage rates (4.79%-4.99%) do support big banks paying 3.15% for 5 year GICs. Yes - time will tell what GIC rates/mortgage rates are in a year.
12:58 pm
October 21, 2013
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I realize mortgages have various ifs ands and buts, but the ratehub rates I looked at for ballpark are said to be effective 20 March 2022, effective for Toronto, are FIXED (not sure why you need to capitalize that but I will follow suit) and all from Big Banks. They currently range from 3.24 at TD to 3.49 at BMO and RBC, five year FIXED. https://www.ratehub.ca/banks/bank-mortgage-rates Ratehub also says they can offer same at 2.69
I presume the add-ons are about the same everywhere. When I had a mortgage, there were none and CU rates were actually higher so I didn't go there; the only changes were in renewal rates.
However, it may well be, as you say, that one doesn't know the actual rate until it's offered to oneself. If that's the case, though, one can't use any posted mortgage rates to explain current GIC rates and it would be unreliable to assume current GIC rates are justified by current mortgage offerings.
10:51 am
September 7, 2018
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Loonie said
Current mortgage rates don't appear to be supporting these GIC rates.
The highest five year mortgage at ratehub, for example, is 3.49%.
I happened to be in my Scotia branch today to get USD. I know the staff there well and asked them about the 5yr 3.15% GIC rate which is fairly extensive right now for the Big 6. They reminded me that Commercial Mortgages range from approx 4.50% to 8.50% depending on whether the mortgages are conventional or CMHC, how much equity by purchaser, other factors etc.
So I would NOT agree with you that current mortgage rates do not support such a GIC rate. Banks are earning a significant mark-up over their 3.15% cost for funds, particularly on Commercial Mortgages which are mortgages on multi-residential, industrial, office and retail property.
1:59 pm
October 21, 2013
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That's interesting. We'd need to know of course how much business will come from the commercial sector. (Car loans are also costlier usually, but comprise a smaller proportion of loans.) However, if they are counting on the commercial sector to boost business, they will certainly need to acquire an enormous amount in GICs if that is their primary source of funding.
The interesting question for me is why they are able to assume that commercial mortgages would outstrip household ones to such a degree. We have a desperate housing shortage. Perhaps this reflects the fact that it has become so difficult for families to buy.
Added: Upon further thought, it still doesn't make clear sense to me that these banks would offer more than they "need" to for competitive puposes. Something else is going on. One thing they are for sure not in the business of is giving away money. The more profit they can make, the better they like it, and that ambition has no limits. I can think of a number of possible reasons, but the argument about corporate loans is not sufficient to explain their sudden and abnormal generosity.
2:36 pm
September 7, 2018
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Actually "Non-Mortgage Loans to individuals for non-business purposes" seems to be the largest source of Interest Revenue on Scotia's financial statements. People borrow for so many things, cars, furniture, vacations, bridge loans, lines of credit, education, weddings etc. We have talked about Canadians being highly in debt.
I just took a quick look at the statements on the OSFI site. Mortgage Interest revenue is substantial but is actually less than the above category (Non-Mortgage Loans to Individuals for non-business purposes). I wonder where Interest Earned on Credit Cards is recorded - probably very large as well since interest rates are somewhere I would guess around 20% for overdue payments.
Anyways, we all agree that we want interest rates for GICs to increase.
3:28 pm
October 21, 2013
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Just saw your post after adding to my last one.
I can't claim to know the inner workings of banks but something still doesn't make sense, namely the sudden spurt to the front of the line for five year GICs. They have I presume, always issued the kinds of loans you are talking about, and they've always been more expensive than personal mortgages as they are less secure, but they haven't always, if ever, offered premium rates on GICs. It just doesn't add up IMO.
Also, I've read that consumers have been paying down their debt lately, so perhaps there is less willingness to take on consumer debt - and less willingness to lend to it if people are overextended as we have also been told. I expect there will be a lot of car loans as people would rather not pay more for gasoline, but, on the other hand, more working at home and driving less plus ongoing shortages of supplies from overseas. Also demographics; aging population buys less in retirement - I know there are some stats for that somewhere as I read them once, discretionary spending declines rapidly around age 75 r earlier - it certainly has in my house!
The most obvious possibilities that come to mind are that they need a lot of money right now, they are stockpiling for future rate that they believe will be even higher and will be here soon, or it's some kind of joint marketing ploy amongst them. Frankly, the first and last don't seem very likely; they made all kinds of money last year and aren't stuck, and some sort of joint effort to pay more in GICs seems counter-intuitive to their way of thinking. I am left again with the middle option, stockpiling cash for significant rate rises that are expected quite soon. I don't think they would do this for a gradual slow rate rise as it would cost too much.
3:55 pm
September 7, 2018
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I don't have the answers either - however I know TD is purchasing First Horizon in the US, a $13.4 billion deal. TD will become the 6th largest bank in the US.
Perhaps the cash inflow from GICs might be used for part of the purchase price of First Horizon. Even 3.15% is not a high rate for TD to borrow money for such expansion as profits will no doubt increase from business in the US. I would not be surprised if other of the Big Six also expand outside of Canada. So having extra cash is not a bad idea if expansion is in the plans.
PS - I see some corporations are issuing 5 year bonds/debentures for around 5% these days - so paying 3.15% is still less to acquire 5 year money.
My belief is that bank profits will increase each year as the country grows in population (eg a large number of Ukrainians will be coming shortly in addition to other immigrants) and also the banks will do more business outside of Canada as they expand so they can easily pay back the GIC at the end of the 5 years just from the additional profits.
Also. banks want to increase dividends to shareholders on a regular basis, so having a pool of cash is good -
5:23 pm
October 21, 2013
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You have added another possibility, namely that they might be needing money for expansion investments of their own rather than lending it out.
I suppose that's possible I don't know anything about how such things would be financed. Normally companies go to the bank shareholders, or the government to ask for money, but they ARE the bank, so they have to raise it themselves somehow or get it from the government. Why wouldn't they just issue more shares? I imagine they would be popular, and it doesn't cost them anything as far as I can make out. But again, this is something I know nothing about.
I can see that they will seek to expand internationally and, if all works out, they will become more and more successful and dividends could go up. I also see big threats on the horizon though and am not sure they are doing enough on that score, or maybe they can't. In particular, at the moment, the Russians, perhaps it was Putin himself, have said that if things escalate they will or could target the worldwide financial structure - and especially that of the countries who have lined up against them. As there seem to be so many skilled hackers based there, I can imagine this could happen.
For all I know, maybe the banks had too many rubles in their portfolios and need to compensate!
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