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HISA down to 1.0%
September 18, 2020
8:29 am
Alexandre
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Non-Registered HISA
Current Rate: 1.30%
New Rate: 1.00%
As of Sep 22, 2020

September 18, 2020
4:33 pm
Peter
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Thanks for sharing this. Any info on the TFSA rate? If they keep the 0.20% spread, then the TFSA would decrease from 1.50% to 1.20%.

September 18, 2020
7:41 pm
Loonie
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Luminus is also at 1.00%.
A new round of cuts?

September 19, 2020
5:31 am
Alexandre
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Peter said
Thanks for sharing this. Any info on the TFSA rate?

Upcoming rate changes:
TFSA HISA - Current rate: 1.50% New rate: 1.10%

Link to full list.

September 19, 2020
5:44 am
KamWest
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Disclaimer - my opinion

If the interest drops below 1% these institutions should be forced to remove the name HIGH INTEREST from the account description. Definitely false advertising at that point.

PS - I have a lot of locked in gic's and things for up to 3.9% at Motus so I am still happy with them but once the rates go to normal there is little else to differentiate them from Meridian (as far as rates go).

Although you do get...

- No Service Fees
- Free Outgoing E-Transfers

Meridian is still charging for e-transfers and on some accounts will give up to 8 for free.

The lines are getting blurred between the online banks and brick and mortar as the interest rates come closer together.

My highest business savings account at Meridian is at 0.55% whereas the highest savings account at Motus is now 1%.

September 19, 2020
8:31 am
canadian.100
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KamWest said
Disclaimer - my opinion

If the interest drops below 1% these institutions should be forced to remove the name HIGH INTEREST from the account description. Definitely false advertising at that point.
  

We were just talking about how some friends bought a very "high priced" home because they got a mortgage at some ridiculously "low interest" rate - so what is low and what is high? It is all relative - hard to assign a definite figure. But I do agree earning even 1.5% and less on a so called HISA these days is sure not "high interest".

September 19, 2020
3:01 pm
hwyc
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KamWest said
Disclaimer - my opinion

If the interest drops below 1% these institutions should be forced to remove the name HIGH INTEREST from the account description. Definitely false advertising at that point.
...

... that sentiment may also touch a sensitive spot here at HighInterestSavings.ca. Are we to begin dropping names on the charts and in the profiles ?

September 19, 2020
3:34 pm
AltaRed
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It is relative. 1% is high interest compared to big bank at 0.05%. Why consider changing anything?

September 19, 2020
5:07 pm
topgun
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AltaRed said
It is relative. 1% is high interest compared to big bank at 0.05%. Why consider changing anything?  

It is 10 years since Tangerine paid 1.5% on a savings account. August 10, 2010. Of course over that time frame my average monthly balance was pretty low. It comes and it goes. One friend says it seems to go faster than it comes.

Have fun.

Have a Great Day

September 19, 2020
5:41 pm
Vatox
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AltaRed said
It is relative. 1% is high interest compared to big bank at 0.05%. Why consider changing anything?  

Agreed, it’s simply what is being offered. As long as it’s in the range of the best offers, it’s still high interest. It just may be lower than we wanted, but I think the term “High Interest” isn’t a predetermined level, it’s The higher side of what’s available. 1% isn’t the best available, but I say it counts as high interest.

Edit: Tang at 0.15% or whatever it is, isn’t high interest!

September 19, 2020
5:49 pm
Norman1
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topgun said

It is 10 years since Tangerine paid 1.5% on a savings account. August 10, 2010. Of course over that time frame my average monthly balance was pretty low. It comes and it goes. One friend says it seems to go faster than it comes.

You may wish to call Tangerine up and see if you have been selected for one of their targeted promotional offers.

People recently have been offered 1.5%, 1.6%, 1.7%, and 1.8%.

I was offered 1.7%, on entire balance, after my previous 2.8%, on new money, offer expired at the end of last month.

September 20, 2020
2:20 am
Kidd
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The experts are predicting, default on loan payments are going to soar in the 3rd and 4th quarter. Once the government stops paying everyone's bills.

Can our banks really afford to bleed on both ends? Their loans are not going to be repaid and they've chased away all of their depositors by offering very low interest rates.

I believe banks will be begging for cash to cover their own obligations, therefore better rates may be around the corner. they'll need our savings to keep their businesses afloat. The stock market may not be as dependable to the banks as in the past, as debts are called, assets will be liquidated.

Cash is king until it's not. i know the banks sell their debt, it's a game of musical chairs, when the music stops our government will be holding ALL the bad debt. I might buy that inflation reduced ticket to Kathmandu after all and then choose to just stay there.

September 20, 2020
5:05 am
Loonie
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The banks may decide to refinance mortgages where possible as ongoing payments are better than defaults. People who are part-way through their mortgages can afford to lengthen their amortization, with lower payments, even in the middle of a term, with bank's cooperation. In addition, quite a number of terms will be maturing, just like GICs, lowering monthly costs to consumers. These things can fend off a significant amount of disaster.

In addition, Norman1 keeps telling us that the banks can borrow much more cheaply elsewhere than from us, which begs the question as to why they bother with us at all, which they do (since there is "a sucker born every minute"). Canadians, by and large, have a great sentimental attachment to their big banks, often to the point of irrationality, as they always seem surprised when they are treated badly, as if they think the bank is their friend - especially true of those over 80.

If memory serves, during the US mortgage meltdown 2008, the banks often just left the properties there and people continued to live in them without paying for months and months. It's not like the banks have nothing when someone can't pay the mortgage; they have a nice piece of property on their hands which they decided was worth the loan risk because the buyer had to put down 20% or whatever it is these days, so they can easily afford a slump of equal amount if not more as prices have likely risen since purchase. It's worth the banks' while to just hang on until the crisis blows over. If they repossessed them, they would have an empty building to try to unload or have to maintain in a bad market. If there is a worldwide slump, then there is motivation for all banks to do the same, to effectively put the system on hold.

However, I'm certainly no international banker. I'm just saying what seems reasonable to me.

September 20, 2020
5:46 am
canadian.100
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Loonie makes some valid points.
Canadian banks (the big 6) are quite solid and have made huge provisions for potential losses; no doubt, the big 6 can withstand a severe downturn; however, if that occurs - the Fed Govt/Bank of Canada will always ensure survival of the big 6.
To put things in perspective, unemployment at the end of August was 10.2% after rising to almost 14% in May. Before the pandemic, in Feb 2020, unemployment was 5.6%. I expect the unemployment rate to fall under 10% by Sept 30. So even if the unemployment rate is 10%, that means that 90% are employed. I don't think the banks are quite as cash starved as Kidd believes - people and businesses will still continue to deal with the big banks - borrowing, buying GICs, maintaining bank accts, foreign exchange transactions, brokerages etc.

September 20, 2020
9:13 am
Vatox
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canadian.100 said
I expect the unemployment rate to fall under 10% by Sept 30.  

It’s looking like a second lockdown could be coming, people are valuing their leisure and social net more than their jobs with COVID-19 rules. It is quite obvious that people aren’t willing to sacrifice. Perhaps the mindsets will change.

September 20, 2020
9:48 am
Norman1
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The banks are not cash starved.

Institutional depositors who don't like the 0.25% per annum from banker's acceptances quickly change their mind when they see Government of Canada treasury bills paying 0.01%.

Loonie said

In addition, Norman1 keeps telling us that the banks can borrow much more cheaply elsewhere than from us, which begs the question as to why they bother with us at all, which they do (since there is "a sucker born every minute"). Canadians, by and large, have a great sentimental attachment to their big banks, often to the point of irrationality, as they always seem surprised when they are treated badly, as if they think the bank is their friend - especially true of those over 80.

I suspect some of the older Canadians have fond memories of their bank approving their mortgage. Perhaps, some were trying to start a small business and Royal Bank was the one who gave them their first operating line of credit after others declined their application.

The big banks are quite happy to take deposits from retail customers who accept the same provincial-bond-like rates (0.05% to 0.25% short term) that the banks pay for deposits from their institutional customers.

They are also quite happy to let their competitors have the deposits that require junk bond rates of 1% to 1.8%. That essentially cripples such competitors from competing for prime mortgages with rates around 1.9% to 2.5%.

September 20, 2020
10:18 am
AltaRed
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+1 to what Norman said. The retail banks have to work a lot harder to secure funds than do the big banks and to competitively lend money back out for a satisfactory net interest margin.

Some of you may have missed what Kidd said regarding 'commercial loans' as compared to mortgages. Mortgages may not be the major issue here due to mortgage insurance and the opportunities to re-finance versus going into default. Commercial loans could be quite a different problem depending on the robustness of the security pledged for the loan. A hair salon or restaurant going out of business presents different problems for the banks. I don't think we know much about how much provision has been set aside for bad commercial loans, and I don't really know how much of an alternative lender's book (the likes of a CU or LBC or HCG) is exposed to commercial/business loans.

To the extent the loan is lost, the lending institution will need to retain deposits to cover that, but are those losses more significant than the decline in new lending? Does that result in the bank's need to have more, or less, liabilities (customer deposits)? I think it varies by institution and thus I don't think we have a basis to determine which of the institutions listed on this site need, or don't need, more deposits.... and thus how they position themselves regarding fund flows.

We need to realize we are not all that important here regarding customer loyalty or retention. It is all about their balance sheets.

September 20, 2020
10:56 am
Norman1
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AltaRed said

To the extent the loan is lost, the lending institution will need to retain deposits to cover that, but are those losses more significant than the decline in new lending? Does that result in the bank's need to have more, or less, liabilities (customer deposits)?…

Deposits cannot be used to cover loan losses. Deposits are actually liabilities and not assets to the financial institution.

As for the money raised for the loan, it was gone the day the loan was made. So, there is no cash impact when the loan goes bad.

Loss of assets is charged against earnings (current or past) or, if past retained earnings have been depleted, shareholder equity. If there isn't enough equity left to meet capital ratio requirements, new shares will need to be issued.

September 20, 2020
2:59 pm
Loonie
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If new shares had to be issued to cover losses, surely the share price would go down significantly?

Regarding commercial loans: It's really hard to get a small business loan and they often want you to put up your house for it. It's a high risk loan, and they know it. They also charge way above mortgage rates for it, so there is lots of profit there to offset losses, assuming most debt is paid.

They are more willing to loan to big corporations. These often have some real assets and there is the hope/expectation that if they got into big trouble, the government would offer them a helping hand. They DO regularly get into trouble, and often it is the taxpayer who is left holding the bag (with a hole in it) , and then they flee to another country.

September 20, 2020
3:45 pm
AltaRed
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Norman1 said

AltaRed said

To the extent the loan is lost, the lending institution will need to retain deposits to cover that, but are those losses more significant than the decline in new lending? Does that result in the bank's need to have more, or less, liabilities (customer deposits)?…

Deposits cannot be used to cover loan losses. Deposits are actually liabilities and not assets to the financial institution.

As for the money raised for the loan, it was gone the day the loan was made. So, there is no cash impact when the loan goes bad.

Loss of assets is charged against earnings (current or past) or, if past retained earnings have been depleted, shareholder equity. If there isn't enough equity left to meet capital ratio requirements, new shares will need to be issued.  

Bad choice of words on my part. I recognize the initial deposit was used to make the loan, but that liability is still on the books and the FI has to come up with the cash IF the depositor wants to transfer out their account balances. It is still a potential cash flow issue (subject to reserves on hand of course). A run on the bank aka HCG 3 years ago is an example in the extreme.

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