The Bank of Canada may be standing still with Wednesday’s rate hold, but the country’s deposit market is still shifting. The difference is that banks are no longer competing by meaningfully raising rates. Instead, they are competing by matching the best ones.
In terms of GICs, the best one-year rate is still 3.65 per cent from WealthONE. The best two-year rate remains 3.8 per cent from Achieva. The best three-year rate is 3.8 per cent by WealthONE. The best five-year is still 4 per cent, now in a four-way tie among MCAN, WealthONE, Oaken and Saven.
The more interesting shift in April is not that the best GIC rates have moved higher, but that more banks moved up to meet the top of the table.
On April 8, EQ Bank alone led the five-year category at 4 per cent. By April 29, the best five-year rate was unchanged at 4 per cent, but offered by four institutions: MCAN, WealthONE, Oaken and Saven.
The same broad pattern does not really show up in savings accounts, where the market looks largely unchanged. The best promotional savings account rates still top out at 4.6 per cent, with Royal Bank of Canada and Canadian Imperial Bank of Commerce tied for first place, while Saven continues to lead the standard-rate market at 2.85 per cent.
The reshuffling is happening mainly in GICs, where more institutions are moving up to match the leaders.
Anyone watching current mortgage rates will also notice something unusual. The best five-year GIC is paying 4 per cent, above the lowest insured five-year fixed mortgage rate of 3.99 per cent. In other words, a saver can now earn more from a guaranteed deposit than some borrowers are paying on a home loan.
For Canadian savers, that is encouraging, but only to a point. More institutions are now matching the best GIC rates, giving savers more choice at the top of the table and less reason to stick with a single provider. But with the Bank of Canada on hold and bond yields broadly stable, the upside for deposit rates also looks limited for now.
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.
Jimmy Nguyen is a writer and content developer at WOWA.ca, a Canadian personal finance platform.
