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2019 09 20 Rate Drop
September 13, 2019
8:25 am
Nehpets
Ontario
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Email received today:

Please note that effective Friday, September 20, 2019, we will be decreasing the interest rates for all of our long-term GICs (registered and non-registered) as follows:
• 1 Year GIC – 2.50% (currently 2.55%)
• 18 Month GIC – 2.55% (currently 2.70%)
• 2 Year GIC – 2.60% (currently 2.75%)
• 3 Year GIC – 2.65% (currently 2.80%)
• 4 Year GIC – 2.75% (currently 2.90%)
• 5 Year GIC – 2.85% (currently 3.00%)
All other Oaken rates will remain unchanged.

Stephen

September 13, 2019
8:59 am
Doug
British Columbia, Canada
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Thanks, @Stephen. I see Peter's updated it already, so that was fast. sf-cool

Separately, my HISA and GIC predictions are playing out. I expect that by this time next year, or sooner, there will be no Canadian 5-year GIC rate above 2.50% and no 1-year GIC rate above 2.25%. Those will be the new "tops"; however, there may continue to be "temporary" or non-standard term promo GIC rates that meet or exceed those rates (notably, Peoples Trust's 3.00%, though that may go down to 2.75% by this time next year).

Cheers,
Doug

September 13, 2019
10:00 am
GICinvestor
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Is it just my imagination?

Do GIC rates usually decrease in the fall?

Are there any historical graphs of say 5 year GIC rates with an overlay of Hubert, Accelerate, Oaken, PT?

I do 5 year laddering and usually renew GICs in September, December, March, June. Should i knock out September?

September 13, 2019
10:29 am
Doug
British Columbia, Canada
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GICinvestor said
Is it just my imagination?

Do GIC rates usually decrease in the fall?

Are there any historical graphs of say 5 year GIC rates with an overlay of Hubert, Accelerate, Oaken, PT?

I do 5 year laddering and usually renew GICs in September, December, March, June. Should i knock out September?  

While there's nothing, insofar as I'm aware, that specific as to have a Hubert/AcceleRate/Oaken/PT overlay, the Registered Deposit Brokers Association produces what it calls GIC rate Advantage Index consisting of GIC issuers of 1-5 year GIC terms that its members issue.

What the 5-year GIC data show, there does tend to be a bottoming of GIC rates in September going back to 2010, the earliest available period (probably a rolling 10-year graph). However, rate declines of GICs within its index are not limited to September, with December, January, and some other months showing declines. There was one instance of a March decline in the index's rates, but it hasn't been for several years.

So, you could try and focus your 5-year GIC renewals to the March and June months. sf-cool

Cheers,
Doug

September 13, 2019
3:56 pm
Loonie
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Doug's report notwithstanding, I think this is very difficult to call.
If we eliminate Dec, Jan, we also eliminate RSP/TFSA season, which is known to produce higher rates more often than not - at least in my experience. Even that, though, is not completely reliable.

It may be that "standard" rates conform to the pattern Doug has described, but perhaps promo rates are not included in this survey. And those are the ones we look for!

For the record, my worst outstanding maturities happen to be in September and December, but so are my best ones! - different years. I've been asking myself a similar question but couldn't come to any clear conclusion.

September 13, 2019
5:57 pm
GICinvestor
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Thanks Doug and Loonie.
I know the history is here for the FIs I use and likely you too. But perhaps the history could be for more years. I used to be real good at excel and graphs but I was hoping to find an easy solution to see the graph in question 🙂

I first got on to the 5 year laddering years ago using the information found here. Then I decided to move to quarterly maturities to spread the interest payments evenly which I almost have in place.

Do I have even amounts by quarter. NO
Will I. MAYBE, ONCE I PROGRAM EXCEL TO TELL ME.

Or.

Should I just accept the blend of 5 year interest rates and not worry about having a glass ball to predict what every 3rd month of the year historically has the best rate....and what month is the start month?
I AM THINKING YES, DON’T BE SO PICKY!

September 13, 2019
9:25 pm
Doug
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@GICinvestor, do you mean staggering your maturities so you always having something maturing in every month or two of every year?

Yeah, I wouldn't be picky about which month(s) your GICs or interest payments mature or pay out. You could have all your GICs mature in March of every year and then just set up an automated fund transfer to transfer the interest from that matured GIC to your main chequing account, if that's part of your monthly retirement income strategy.

When I worked at HSBC, even though HSBC RRIFs allowed the retiree to request a monthly withdrawal, we had lots of retirees that had a lump-sum pay out once a year, usually in January, that they then rationed accordingly across the upcoming year.

Cheers,
Doug

September 14, 2019
8:31 am
GICinvestor
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Doug said
@GICinvestor, do you mean staggering your maturities so you always having something maturing in every month or two of every year?
 

Not exactly. I have GICs that mature every quarter and a lot of them pay interest annually too. I do it for regular income and so I only do the renewal process during every quarter as well (just a preference to not have to process renewals every month). It does make a difference.

November 25, 2019
5:58 am
Bud
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Havin a hard time with 2.85@5yr convince me

GIC King

November 25, 2019
11:36 am
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Bud said
Havin a hard time with 2.85@5yr convince me  

I hear you. But I have faith in the 5 year laddering option. But of course if I see uneven amounts I would plug the hole, which would mean I would not put into a 5 yr. I like the fairly even availability of a fifth of my funds every year. But you have to accept or appreciate the blend of 5 year interest rates.....not for everyone I guess.

November 25, 2019
4:14 pm
gicjunkie
Ontario
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Bud said
Havin a hard time with 2.85@5yr convince me  

I'm surprised that nobody has reported the recent small rate increase. Sure better than another 5 point drop. And yes, I know it's in the GIC chart area.

Term Annual Semi-annual Monthly
1 Year 2.55 2.50 2.45
18 Months 2.60 2.55 2.50
2 Years 2.65 2.60 2.55
3 Years 2.70 2.65 2.60
4 Years 2.80 2.75 2.70
5 Years 2.90 2.85 2.8

November 25, 2019
4:19 pm
Peter
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The November 25, 2019 rate increase was reported in this thread.

November 25, 2019
4:22 pm
gicjunkie
Ontario
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Peter said
The November 25, 2019 rate increase was reported in this thread.  

Sorry, I missed the other part of the thread.

December 3, 2019
3:48 pm
dentgal
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Chocolates arrived today!

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