As GIC Rates Rise, the Spread with Mortgage Borrowing Costs Narrows
For savers, this week’s rate update is less about a broad increase in deposit returns and more about where competition is appearing.
The best savings accounts are largely unchanged, while several GIC rate categories have shifted enough to change the leaderboard. Investors locking in for two to five years are seeing the more meaningful moves.
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The biggest change is in the two-year term. Oaken Financial now offers the top two-year GIC rate at 3.85 per cent, ahead of Achieva Financial at 3.80 per cent. Oaken is also gaining visibility across the table: it is tied for the best five-year GIC rate and tied for second in the three-year category.
One-year GICs are steady at the top, with Achieva Financial and Saven Financial both offering 3.60 per cent. The next-best one-year GIC rates are a 3.50 per cent tie among Oaken Financial, Maxa Financial and Outlook Financial.
That leaves the short end calmer than the two-year term. Savers with TFSA contribution room may also want to compare TFSA GICs, which are registered, low-risk options where interest is earned tax-free.
The longer terms are clustered close to 4 per cent. The best three-year GIC is 3.93 per cent from HomeEquity Bank, followed by WealthONE and Oaken Financial at 3.85 per cent. The best five-year GIC is 4.05 per cent, shared by WealthONE and Oaken Financial, with HomeEquity Bank close behind at 4.04 per cent.
Promotional savings accounts still have the highest headline rates, led by BMO at 4.65 per cent for four months and followed by a 4.60 per cent tie from Simplii Financial, RBC and CIBC. These offers may work for savers with short-term cash who are willing to move money once the promotion ends.
Afterward, the rate drops to 0.50 per cent at BMO, 0.30 per cent at Simplii and CIBC, and 0.55 per cent at RBC.
Regular savings rates are unchanged at the top of the table. Saven Financial continues to lead at 2.85 per cent, followed by Oaken Financial at 2.80 per cent.
The comparison with mortgage rates is unusually close. The best three-year and five-year fixed mortgage rates are both 4.04 per cent. That leaves the top three-year GIC 11 basis points below the comparable mortgage rate, while the top five-year GIC is 1 basis point higher.
For savers, the decision is becoming more about timing and commitment than simply finding the highest advertised rate. Cash that may be needed soon can still benefit from a temporary promotion, but money that can be locked away is earning close to mortgage-level rates in longer-term GICs.
Interest rates are provided by WOWA.ca, which gathers, aggregates and freely disseminates data on mortgage rates, savings accounts, and GIC rates from 50+ Canadian financial institutions.
Sanika Purohit is a writer and content developer at WOWA.ca, a Canadian personal finance platform.
This article was first reported by The Globe and Mail
