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GIC rate fluctuation
June 16, 2016
6:37 am
davidgeorge
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CDF's GIC rate changes frequently. Last week, they were 1.85, 2.35, 2.42, 2.45 and 2.5 for 1 to 5 year GIC, and now they are 1.80, 2.25. 2.31. 2.33 and 2.37. Why is this? I am in the middle of moving some fund for 2.5% 5 year GIC, but now they dropped to 2.37%. The GIC rates look like a stock market: change all the time.

June 16, 2016
7:21 am
kanaka
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davidgeorge said

CDF's GIC rate changes frequently. Last week, they were 1.85, 2.35, 2.42, 2.45 and 2.5 for 1 to 5 year GIC, and now they are 1.80, 2.25. 2.31. 2.33 and 2.37. Why is this? I am in the middle of moving some fund for 2.5% 5 year GIC, but now they dropped to 2.37%. The GIC rates look like a stock market: change all the time.

Assuming you like CDIC coverage......look at Oaken. If you don't like CDF's fluctuations.....move on...there is competition! You don't have to be loyal.

June 16, 2016
11:24 am
NorthernRaven
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Banks need to roughly match the maturity of their liabilities (incuding GICs) to their assets (like mortgages) so they don't have, say, a big excess of short-term funding vs a big deficit of long-term mortgages. So they may tweak rates or offer special rates for certain terms to attract the needed length of deposits.

A general downward adjustment like this may be responding to the non-raising of US rates this week, which will have weakened rate pressure generally. CDF may also be slightly too successful in raising money, and a slight cut could marginally reduce incoming money. And of course, every little reduction where possible increases their operating margins!

June 16, 2016
11:37 am
xxxx
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Agree Northern Raven - the "non raising of US rates" is significant - there is no reason to raise rates and we will continue to be in a low rate environment, perhaps lower rates and possibility of negative rates as some countries are already experiencing or contemplating. So the drop in rates by CDF is not out of line - likely others will follow.
In addition, the possible Brexit is likely to have some negative effects for the economies of various countries - the Canadian economy likely will get another knock. Wonder when the Liberals plan to "kick start" the economy? Lots of rhetoric (and selfies) but no action - as we head into summer.

June 16, 2016
10:59 pm
Loonie
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Most financial institutions will hold a rate for a month or so, until your money arrives, if you ask them.

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