Another rate drop ahead - effective March 26, 2019 [Oaken GIC] | Oaken Financial | Discussion forum

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Another rate drop ahead - effective March 26, 2019 [Oaken GIC]
March 19, 2019
5:13 am
hwyc
GTA
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Got email just now.

Please note that effective Tuesday, March 26, 2019, we will be decreasing the interest rates for all our long-term GICs (registered and non-registered) as follows:

• 1 Year GIC – 2.75% (currently 3.00%)
• 18 Month GIC – 2.80% (currently 3.20%)
• 2 Year GIC – 2.85% (currently 3.20%)
• 3 Year GIC – 2.95% (currently 3.30%)
• 4 Year GIC – 3.05% (currently 3.35%)
• 5 Year GIC – 3.20% (currently 3.40%)

All other Oaken rates will remain unchanged.

March 19, 2019
10:32 am
Doug
British Columbia, Canada
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hwyc said
Got email just now.

Please note that effective Tuesday, March 26, 2019, we will be decreasing the interest rates for all our long-term GICs (registered and non-registered) as follows:

• 1 Year GIC – 2.75% (currently 3.00%)
• 18 Month GIC – 2.80% (currently 3.20%)
• 2 Year GIC – 2.85% (currently 3.20%)
• 3 Year GIC – 2.95% (currently 3.30%)
• 4 Year GIC – 3.05% (currently 3.35%)
• 5 Year GIC – 3.20% (currently 3.40%)

All other Oaken rates will remain unchanged.  

They were still significantly above market, save for a few outlier institutions like Tandia and Omnia Direct, which are much smaller, so this isn't surprising. I suspect you could still one further rate drop in the next couple months (and one more with each of Tangerine, EQ Bank, and the Manitoba CUs by and large). 🙂

Looking at HCG's Q4 balance sheet, they're currently way over capitalized (something like 17-18% CET1 and over 20% total capital ratio, which is unheard of; Scotiabank is the least capitalized of the "Big 6" banks, which could explain their superior GIC rates relative to the others, as on Scotia iTRADE) and have lots of liquidity, too. Now they can reduce some of the added interest expense and juice their earnings "firepower" for withering HCG shareholders. sf-smile

Cheers,
Doug

March 19, 2019
3:50 pm
Loonie
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No surprise really, although i wonder why they did it in two stages.
I have been saying for some time that Oaken will not necessarily remain a rate leader and that I expected them to drop down.
If you were paying close attention before they had their meltdown a couple of years ago, it was clear they were trending down in comparison to others on the market. They are now in a position where they can return to that strategy.

March 19, 2019
6:02 pm
Doug
British Columbia, Canada
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Loonie said
No surprise really, although i wonder why they did it in two stages.
I have been saying for some time that Oaken will not necessarily remain a rate leader and that I expected them to drop down.
If you were paying close attention before they had their meltdown a couple of years ago, it was clear they were trending down in comparison to others on the market. They are now in a position where they can return to that strategy.  

Yeah, but I still expect them to remain competitive with EQ Bank and Tangerine on GIC rates and competitive with EQ Bank on the HISA rate (now that EQ Bank is no longer a market leader). sf-cool

When this semester is over, I will have more to say on Oaken and EQ as I plan to do a review of their 2018 performance and plans for 2019. 🙂

Cheers,
Doug

March 19, 2019
9:32 pm
Loonie
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Let's hope it's not a race to the bottom.
Feds now promising some kind of aid to home buyer (I didn't get the details) may bump up the mortgage biz.

There are, I would think a number of reasons for being over-capitalized. Could be intentional, if they feel pessimistic, yes?

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