GIC rates climb across all terms while savings rates sit still

The Bank of Canada held its policy rate at 2.25 per cent last week for a seventh time, citing energy prices and new tariffs as inflation risks.

Longer bond yields climbed anyway. The five-year Government of Canada benchmark yield hit 3.44 per cent on Sept. 8, up from 3.33 per cent at the end of August. Deposit rates have followed, with the largest increases at the long end.

WealthOne’s five-year GIC pays the highest rate on the table outside short-term promotions, at 4.30 per cent, 20 basis points higher than August, with Oaken and Saven tied second at 4.25 per cent. Held in a TFSA, that interest is tax-free.

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WealthOne also shares the lead on three-year GICs with Haventree Bank at 4.05 per cent, while Haventree tops two-year GICs at 4.00 per cent. Both are higher than last month’s best rates of 3.90 per cent, which were offered by WealthOne for both terms.

The short end moved less. The best one-year GIC rate is 3.70 per cent, a tie between WealthOne and Saven, five basis points above the highest rate of 3.65 per cent offered by MCAN a month ago. MCAN, still at 3.65 per cent, now shares the second-best rate with Achieva, MAXA and Outlook.

Savings rates, meanwhile, remained frozen. WealthOne and Manulife still share the top standard high interest savings rate at 3.00 per cent, with Saven’s rate at 2.85 per cent. WealthOne’s RRSP HISA pays 3.00 per cent on any balance, while its non-registered account is tiered: 2.60 per cent under $10,000, 2.75 per cent to $24,999, and 3.00 per cent at $25,000 and up. Manulife’s 3.00 per cent rate is for non-registered accounts only and expires two years after deposit.

If the money is for a first home, Innovation Federal Credit Union pays a rate of 4.25 per cent on an FHSA, more than any savings account and every GIC except WealthOne’s five-year GIC that offers 4.30 per cent, tax-free.

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Promo offers also held. BMO’s promotional rate of 5.00 per cent for four months leads, ahead of a 4.60 per cent tie from Simplii (five months), RBC and CIBC (three months each). All of those rates drop to 0.55 per cent or less afterward.

The spread between savings rates and borrowing costs has widened too. The best five-year fixed mortgage rate is 3.94 per cent and the three-year rate is 3.89 per cent, leaving both below the matching GIC rates, by 36 and 16 basis points. Lending money to a bank now pays significantly better than borrowing it costs.

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.