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EQ Bank GIC Rates Change
January 25, 2023
6:19 am
cgouimet
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Down today ...

2Yr: 4.75->4.55
3Yr: 4.55->4.40
4Yr: 4.40->4.30
5Yr: 4.30->4.25

CGO
January 25, 2023
12:02 pm
Wayno
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When I moved all my TSFAs out of their bank in December and gave them feedback on their "disappointing" rates, the CSR mentioned many other customers were giving the same feedback !

January 26, 2023
8:08 am
COIN
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cgouimet said
Down today ...

2Yr: 4.75->4.55
3Yr: 4.55->4.40
4Yr: 4.40->4.30
5Yr: 4.30->4.25  

I noticed the same at two other institutions but their decrease was from 0.05%.

January 26, 2023
9:16 am
AltaRed
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Longer term deposit rates will continue to come down as the economy slows and inflation rate increases continue to decline. FIs are smart not to offer longer term rates they will be 'over exposed' too by 2025 or so.

I am more astounded why some FIs on the GIC list are still offering in the range of 5% for longer term deposits. Who is borrowing fixed term money these days anywhere close to prime (6.7%) or higher and why?

January 26, 2023
11:05 am
Loonie
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AltaRed said
Longer term deposit rates will continue to come down as the economy slows and inflation rate increases continue to decline. FIs are smart not to offer longer term rates they will be 'over exposed' too by 2025 or so.

I am more astounded why some FIs on the GIC list are still offering in the range of 5% for longer term deposits. Who is borrowing fixed term money these days anywhere close to prime (6.7%) or higher and why?  

I imagine there are quite a few people out there who don't put much stock in BoC predictions. That was where we were told that inflation was "transitory". Because BoC was blind to reality they failed to deal with inflation in a timely manner. And now we are supposed to believe tiem on this next leg of the journey? Some will; some won't.

If the future were all so cut-and-dried, we wouldn't have the BoC fiddling around with the economy every six weeks, trying to massage it into a certain outcome.

January 26, 2023
12:42 pm
AltaRed
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I don't think Canadians are any smarter, or dumber, than the overall global debt market, or that the BoC is any brighter or dumber than most other major OECD central bankers. It is the overall debt market that sets the tone.

Should Canadians at large bet against the overall $125 Trillion global debt market, or perhaps more relevant to us, the yield curve of the $50T US portion of global debt market and/or the yield curve of the rather small $5T Canadian portion of the global debt market? In recent months, it has been increasingly telling us inflation will come down and not to commit to high rate fixed term debt.

What I think is questionable is why some Canadian FIs (and their customers) seem to be increasingly out of step with everyone else, including the larger Canadian financial institutions.

January 26, 2023
12:51 pm
Alexandre
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AltaRed said
Who is borrowing fixed term money these days anywhere close to prime (6.7%) or higher and why?  

My fixed rate mortgage was 6.9%, and that was at the beginning of this century. I survived.

January 26, 2023
2:00 pm
AltaRed
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As did many others at that time, but people loaded up with extra ordinary amounts of cheap debt since the financial crisis and can no longer pay similar debt servicing costs today.

Would you sign up for a ~6.7% five year fixed term mortgage today? That is about what is implied by the ~5% five year GIC rates on the GIC chart.

January 26, 2023
3:57 pm
Loonie
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Norman1 has assured us repeatedly that there is no such thing as a GIC without a matching loan. It must be out there somewhere...sf-confused

Someone else suggested these loans were hiding in plain sight in commercial loans...

I'm going to hunt for my metal detector so I can "follow the money"... sf-laugh

January 26, 2023
4:24 pm
AltaRed
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There isn't on a one to one basis but aggregate deposits fund aggregate lending and risk management practices mandate some duration matching to avoid rate exposure. The longer term deposit rates of the ~8 FIs at the top of the GIC chart are currently out of sync with the next group.

January 26, 2023
9:03 pm
Norman1
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AltaRed said

Would you sign up for a ~6.7% five year fixed term mortgage today? That is about what is implied by the ~5% five year GIC rates on the GIC chart.

Mortgages are not the only five-year fixed-term loans those GIC's can fund.

They could easily also fund five-year debt consolidation loans with rates 7% to 12%. People will sign up for a 7% to 12% fixed rate loan to address an issue with their credit cards that charge 18%+.

It is of interest that, except for Wealth One Bank, those top five-year GIC rates are from credit unions or from a credit union owned bank.

January 27, 2023
4:34 am
mechone
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Every year at this time ,i have seen GIC rates fall from Dec,Jan ,Feb ,Mar, then start to rise in April, lots of people including myself dumping money into market buying GIC's it's RRSP season

January 27, 2023
5:15 am
Alexandre
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AltaRed said
people loaded up with extra ordinary amounts of cheap debt since the financial crisis and can no longer pay similar debt servicing costs today.

I hear that all the time, but I don't see reports of substantial increase in personal bankruptcies.
Besides, today's salaries are higher than 20 years ago.

January 27, 2023
5:54 am
mechone
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Alexandre said

AltaRed said
people loaded up with extra ordinary amounts of cheap debt since the financial crisis and can no longer pay similar debt servicing costs today.

I hear that all the time, but I don't see reports of substantial increase in personal bankruptcies.
Besides, today's salaries are higher than 20 years ago.  

Personal bankruptcies rose 22.5% in third quarter of 2022 compared to same time last yearThe latest bankruptcy and insolvency data released by the Office of the Superintendent of Bankruptcy Canada (OSB) found consumer insolvency filings in Canada rose 22.5% in this year’s third quarter compared to the same quarter last year.

This is the highest increase in 13 years.

January 27, 2023
6:20 am
Alexandre
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Jan 6, 2023. https://dailyhive.com/canada/personal-bankruptcies-up-inflation

This year, nearly 100,000 Canadians declared bankruptcy, up from 90,700 last year.

While that might look bad in percentage, in absolute numbers extra 800 bankruptcies monthly for the country with the population of 38,500,000 does not count as substantial increase in personal bankruptcies, in my book.

January 27, 2023
7:29 am
AltaRed
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Norman1 said
They could easily also fund five-year debt consolidation loans with rates 7% to 12%. People will sign up for a 7% to 12% fixed rate loan to address an issue with their credit cards that charge 18%+.

It is of interest that, except for Wealth One Bank, those top five-year GIC rates are from credit unions or from a credit union owned bank.  

I agree it is more than fixed term mortgages. I was looking at auto loan and line of credit rates when I posted that to see where else that deposit money might go.

The more interesting part of my prior post was what you just said.... Those top rates are from credit unions (I consider Alterna Bank as part of the Alterna CU system, and Wealth One is a boutique outfit targeting a specific community). Why would their customer base be that different?

January 27, 2023
8:05 am
Rail Baron
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AltaRed said

I agree it is more than fixed term mortgages. I was looking at auto loan and line of credit rates when I posted that to see where else that deposit money might go.

The more interesting part of my prior post was what you just said.... Those top rates are from credit unions (I consider Alterna Bank as part of the Alterna CU system, and Wealth One is a boutique outfit targeting a specific community). Why would their customer base be that different?  

Maybe it is the profit margins that differ between Credit Unions and chartered banks, in addition to the customer base?

January 27, 2023
8:37 am
mechone
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Alexandre said
Jan 6, 2023. https://dailyhive.com/canada/personal-bankruptcies-up-inflation

This year, nearly 100,000 Canadians declared bankruptcy, up from 90,700 last year.

While that might look bad in percentage, in absolute numbers extra 800 bankruptcies monthly for the country with the population of 38,500,000 does not count as substantial increase in personal bankruptcies, in my book.  

Perhaps not but your counting kids which represent 30% of that number. That was last sept 22 ,we will see first 1/4 this year .People I work with had to renew mortgages up 1000 a month in payments

January 27, 2023
8:46 am
savemoresaveoften
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mechone said

Perhaps not but your counting kids which represent 30% of that number. That was last sept 22 ,we will see first 1/4 this year .People I work with had to renew mortgages up 1000 a month in payments  

I feel sorry for those who "listened" to the advice of so called financial professionals and signed up for a variable or a short fixed term mortgage last 2 years...

I also assume people who failed the stress test now does not feel too bad about it.

January 27, 2023
11:33 am
Norman1
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AltaRed said

The more interesting part of my prior post was what you just said.... Those top rates are from credit unions (I consider Alterna Bank as part of the Alterna CU system, and Wealth One is a boutique outfit targeting a specific community). Why would their customer base be that different?

That's just the way it turns out for some of the smaller credit unions. Smaller customer base. Less diversified customer base. They don't have the set up to raise deposits from as many different people and businesses like the large banks do.

I'm sure Meridian would rather offer only 3.75% on five-year GIC's, like CIBC is offering, instead of 5%. But, 3.75% likely doesn't bring in the needed amount of 5-year deposits for them.

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