Government bond yields have been on the rise recently, due to concerns about inflation and higher confidence in the economic recovery around the world. This has also occurred at the same time that stock markets have increased due to soaring energy and resource prices. As a result, there has been pressure on mortgage lenders to increase fixed rates, and we saw CIBC and TD mortgage rates were increased this week, but a quieter story has been the run up in GIC rates that have also moved higher.
The best GIC rates for a 5 year product were as high as 4.00% during the summer, but then levelled off to 3.30% for a few months, and remained there until late last week, when we saw a sudden jump up to the current best GIC rates in Canada on a 5 year of 3.40%, which is available through one of our broker partners. You can see how different rates stack up in the market and compare GIC rates here.
It seems that we’re moving into the higher interest rate environment that the Bank of Canada and Finance Minister, Jim Flaherty, have been warning Canadians will happen eventually, it’s just happening a little later than expected. When the Central Bank started increasing interest rates late last year, many thought it would begin a cycle of slow, methodical interest rate increases, but with softening economic results and inflation staying in check, they paused this cycle, and Canadian interest rates are expected to hold steady until mid-2011.
Nonetheless, it seems there is a much better outlook for those smart savers who are looking to boost savings on things like high interest savings accounts, as higher savings rates appear to be coming sooner rather than later.