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Federal Budget: CDIC Act to be modernized
August 10, 2018
11:16 am
AltaRed
BC Interior
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Loonie said
Considering that the MB CUs that offer insured 6 and 7 yr GICs are not giving particularly good rates on them, it doesn't sound very helpful at the moment or in any rising-rate environment.  

Not at the moment, but it might some years into the future. There is very little incentive to offer higher rates for longer term money because the bond yield curve also isn't providing any incentive to go longer term. The bond yield curve could actually invert in the not too distant future.

Also, mortgage lenders are generally offering the same rates for 5,6,7 year terms. 5+ years out appears to be too far out to make a 'call' on interest rates.

August 13, 2018
2:01 pm
Doug
British Columbia, Canada
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Loonie said
I received a consumer satisfaction survey today from one of the CDIC-insured FIs that is on our charts.
One of the questions stated that CDIC is thinking about raising the insurable TERM LIMITS. That would be a broadening of "scope" and probably wouldn't cost the banks any more (per $ per year). It just ties up your money longer, for better or worse.
Considering that the MB CUs that offer insured 6 and 7 yr GICs are not giving particularly good rates on them, it doesn't sound very helpful at the moment or in any rising-rate environment.  

Good comment about it not being very helpful (to us, as consumers) in a potentially rising rate environment, Loonie. sf-cool

I noted the same survey and I think you're on to something. At best, that's likely what's on offer and when you think about it, in light of the Home Capital Group liquidity issue a year and a half ago, would please both the regulators and the banks.

That said, I'm a firm believer that the BoC has another 25-50 bps, at most, before rising interest rates become damaging to the Canadian economy. I'm now predicting that by winter 2020, at the latest, we'll be back into a declining rate environment, at least for the short- to medium-term from that point.

Cheers,
Doug

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