Prime rate drops 0.15% to 2.85% - Best 5-year fixed Mortgage Rates

The big banks cut their prime lending rates by 0.15 of a percentage point to 2.85 per cent. This after The Bank of Canada cut the overnight rate by a 0.25% to 0.75%.

So a five-year fixed mortgage posted rate is 4.79 to 4.84 per cent at several big banks - most borrowers can negotiate and pay considerably less than these posted rates.  For even better 5 year fixed rates consider the following:

5-year rate

2.69%    CanWise Financial, No pre-approval, 20% Lump Sum Pre-payments

2.74%    Mortgage Alliance Company of Canada, No pre-approval, 20% Lump Sum Pre-pay

2.79%    Key Mortgage Partners Dominion Lending Centres, No pre-appr., 20% Lump Sum Pre-pay

CIBC Market Linked GIC - Guaranteed Returns, Higher Potential Growth - But Read the Fine Print

CIBC is offering you a chance to be a pig in shining armour with their Market-Linked GICs!

Let's break down the graphic for you. Pigs want more, more, more ...let's say it applies to investment earnings too.  But they are scaredy pigs so they need protection like the armour (i.e., guaranteed principal).

CIBC's says Market-Linked GICs offer these key benefits:

• Higher return potential than regular GICs based on the
performance of Canadian or global market indices
• Your principal is fully protected
• Choice of 3- or 5-year terms (35 or 59 months for
CIBC Stock Market Advantage RRSP GIC)
• Low minimum investment of only $500
• Available as CIBC RRSP and non-registered investments
• Diversification in one easy step

They come in  few flavours depending on whether you want a minimum return: Guaranteed Market Return - Guaranteed repayment of your principal at maturity along with annual interest payments.

Whether you want more upside: Market Return - Guaranteed repayment of your principal at maturity with the potential to benefit from any gains in the underlying index.  

Or something else: Monthly Income Fund-Linked  Guaranteed repayment of your principal at maturity along with a potential return linked to the quarterly performance of the Class A units of the CIBC Monthly Income Fund.

These may be of interest to short term investors as a replacement to meagre GIC interest rates at the bank (especially with the recent cut in Bank of Canada and likely savings rates).  But its not a replacement for participating in the stock market : because participation rates are so low a long term investor would rather be in the market and ride out the ups and downs.  Read the fine print: even a participation rate of 90% - sounds great! - may only give you 45% of the returns at the end of the term, because your earnings are based on the average of the quarterly returns over 5 years.  Meaning if the market doubles in a steady trend upward +100%, the average over the term is only half of the end value, meaning +50% of which you get 90% of that, meaning only 45%.

Key disbenefits would be:

  • you are getting taxed as interest whereas the underlying holdings would give you a dividend that is more favourably taxed
  • long term investors are giving up more than half of the underlying returns with the participation rate based on average quarterly fund and index values

Bank of Canada Drops Rate 0.25%- one quarter point to 0.75% !!!

Borrowers rejoice!  The Bank of Canada (BoC) met today and decided to drop the overnight lending rate by a quarter percent to 0.75%.  So any existing variable rate mortgages that you hold now will be 0.25% less than they were yesterday.  Keep an eye for a notice in the mail from your lender advising of this rate change.

As you know, the overnight rate has not changed in over four years!  This announcement not given references to oil prices, the global economy, and weakening inflation.  Stay tuned for the next BoC meeting March 4, 2015.

S&P 500 Returns for 2015 - Overvalued Based on Historical PE

What will the S&P 500 return in 2015?  The Economist's William Gibson said "The future is already here – it's just not evenly distributed."

Meaning? We can use a distribution of outcomes from the past to point us in the general direction of future 2015 returns, but there is no certainty.  The bad news is most likely - current prices and earnings suggest caution and that strong positive returns for the S&P500 in 2015 are not likely. This considers the 10-year average of inflation-adjusted earnings and the Cyclically Adjusted Price Earnings Ratio, or as one blogger calls it "P/E10".

The 2014 year end P/E10 ratio was 26.8.  This puts S&P500 prices in the overpriced, overvalued top band of the historical distribution of P/E10 ratios (i.e., the 5th quintile band of 21.2 - 44.1 in the chart below).  As dshort puts it, "By this historic measure, the market is expensive, with the ratio approximately 61% above its average (arithmetic mean) of 16.6"

So based on recent earning and prices, and the distribution of past outcomes, in 2015 the S&P 500 has more room to drop than to go up.  When the P/E10 ratio is as high as 26.8 prices can go up - in the past 20 years they increased to 44.2 into the Tech Bubble.  But that was eventually followed by a P/E10 of 13.3 .. .a drop of 50% from where we are now.

Savings Rates Accelerate Financial - Deposit Guarantee

Earn 2.1% on Accelerate Financial's AcceleRate Savings,
Variable TFSA, RRSP, and RRIF Accounts.  This is not a short term, promotional rate like Tangerine or CIBCare offering.  It is every day!

All deposits including interest are guaranteed without limit by the Deposit Guarantee Corporation of Manitoba - this provides Provide a 100% guarantee of deposits held with Manitoba credit unions and caisses populaires.  This is better than the CDIC insurance at big banks that insures eligible deposits  up to a maximum of $100,000 (principal and interest combined) per depositor, for each account.

Accelerate Financial's GIC rates are also very competitive.  These are comparable to Achieva Financial, another Manitoba institution.  

AcceleRate GIC, TFSA, RRSP, and RRIF
 1 Year Term
2 Year Term
3 Year Term
4 Year Term
5 Year Term
6 Year Term
7 Year Term
Rates are subject to change without notice

Remember, the DGCM guarantee covers all your deposits with Accelerate Financial or Achieva Financial, even if you live outside of the province of Manitoba! (no need to move to Winterpeg, Manitscoldout to earn grates rates!)

Compare with Other Banks and Financial Institutions

Great GIC Rates at Oaken and Achieva Financial - Best RESP GIC Rates

Great rates on GICs can now be found at Oaken Financial for those interested in earning a little more with online banking.  Terms range from 1 to 5 years.  Minimum deposits are $1000 except for RIFs which have a $10,000 minimum. All the details from their website are provided below.  These are about the best rates you can get for a 5 year term, matching Achieva Financial's 5 year rate.

Earn a $50 Bonus on New Tangerine Accounts


Term1 year18 mths2 year3 year4 year5 yearMin. Dep.
Annual Compound or Annual Pay2.052.252.352.402.602.80$1,000


TermRateMin. Dep.
After 30 Days1.75$1,000
After 90 Days2.00$1,000

SHORT-TERM DEPOSIT(RSP from 90 days minimum $2,500)

Term30-59 days60-89 days90-119 days120-179 days180-269 days270-364 daysMin. Dep.
Paid at Maturity1.751.751.751.751.851.90$1,000


Term1 year18 mths2 year3 year4 year5 yearMin. Dep.
Annual Compound2.052.252.352.402.602.80$1,000


Term1 year18 mths2 year3 year4 year5 yearMin. Dep.
Annual Compound or Annual Pay2.052.252.352.402.602.80$1,000


Income Options: Annual, Semi-Annual, Quarterly and Monthly
Term1 year2 year3 year4 year5 yearMin. Dep.
Annual Compound or Annual Pay2.052.352.402.602.80$10,000


Oaken Savings Account1.75

Achieva Financial has a better 1, 2, and 4 year rates and a higher daily interest savings rate. These are their current rates:


Daily Interest Savings2.00%
1 Year Term2.25%
2 Year Term2.40%
3 Year Term2.50%
4 Year Term2.65%
5 Year Term2.80%

Achieva Financial offers these rates on RRSP GIC, TFSA GIC and RRIF GIC products. There is a $1000 minimum purchase, even for RRIF accounts.  Achieva Financial customers can earn bonuses by referring friends who open new accounts.  The Customer Referral Program gives a $25 bonus to you and your friend if they open a new account an deposit $250 or more.  It's like the ING Direct orange key bonus program.  To redeem the Achieva bonus, customers must give a coupon to their friend, enter their name and have then send it with the deposit.

Neither Oaken Financial, Achieva Financial nor many other 'great GIC rate' institutions offer RESP accounts.  If you want to earn a great GIC rate in an RESP then try one of the many institutions that sell GIC term deposits as 'bonds' at Questrade (see new post for details).

$50 Bonus Orange Key 40132831S1 at Tangerine

Use Orange Key 40132831S1 to increase your savings!  Open any new account at Tangerine until March 31, 2015, and  receive a $50 Refer-a-Friend Bonus - its double bonus time!

Click here to sign up.

Plus, get an additional $25 Bonus when you set up an Automatic Savings Program (ASP) into a Tangerine Savings Account with a minimum $100 per month for 6 continuous months.  It’s a simple way to save.

Plus earn 2.5%  interest for a limited time.

Best Canadian Savings and TFSA Rates

Here is a list of the best Bank and Credit Union savings rates across the country.  No big banks included unless you count their subsidiaries!  Some offer higher short term bonus rates but many offer 2% every day of the year.  Some of the best rates are from Manitoba Credit Unions marked 'MB' below. Deposit Guarantee Corporation of Manitoba, unlike the big bank's CDIC, guarantees 100% of deposits!

Bank / Credit Union Account Rate TFSA rate QB CU OB
AcceleRate Financial AcceleRate Savings 2.10% 2.10% Y MB Y
Achieva Financial Achieva Savings 2.00% 2.00% Y MB Y
Bridgewater Bank Smart eSavings Account  1.85% n/a
Canadian Direct Financial KeyRate Savings Account 1.90% 2.00% Y
Canadian Tire Financial High Interest Savings 1.50% 1.60% Y
Hubert Financial Happy Savings Account 1.95% 1.95% MB Y
ICICI Bank HiSAVE Savings Account 1.45% 1.80% Y Y
Implicity Financial High Interest Savings Account 2.00% 2.00% Y MB Y
MAXA Financial MAXA Savings 2.00% 2.00% Y MB Y
Oaken Financial Oaken Savings Account 1.75% n/a Y Y
Outlook Financial High Interest Savings Account 2.00% 2.00% Y MB Y
PC Financial Interest Plus 1.30% 1.30% Y
Peoples Trust Peoples Choice e-Savings Account 1.80% 2.50% Y Y
Tangerine Bank Tangerine Savings Account 1.30% 1.30% Y Y

QB = Available in Quebec
CU = Credit Union, insured by the relevant province’s credit union deposit insurance rather than the CDIC
OB = Online Banking

What's covered and what is not for Manitoba Credit Unions: In their own words:

"The Deposit Guarantee Corporation of Manitoba provides an unlimited guarantee of all deposits in a Manitoba credit union or caisse populaire including accrued interest to date of payout. This guarantee covers all deposits including those in a foreign currency or with terms exceeding five years. The guarantee is not affected by a credit union or caisse populaire changing its name, amalgamating or entering into similar agreements.

The guarantee covers deposits only. These include chequing, savings, guaranteed investment certificates/term deposits (GICs), and Registered Plans. The guarantee does not cover non-deposit instruments which would include members’ share capital (e.g. common, surplus, or preferred shares), mutual funds, and self-administered RRSPs that are not deposits (e.g. equity shares and mutual funds)."

Oaken Financial Savings Rate

While other financial institutions (CIBC, Tangerine) are offering limited time offer bonus interest on savings accounts, Oaken Financial has a high rate all year around - 1.75%. Plus they know about the proven effective use of squirrels in marketing - see below.

Other institutions offer just over 2%: Best Canadian Savings and TFSA Rates

Oaken Financial offers no monthly fees, no minimum balances, and no limit to the number of transactions.  You can transfer money from your account to an Oaken GIC and access your money whenever you need it.  Use Oaken Financial Online Banking to check your balances and manage your account.

Oaken Financial is member of CDIC (Canada Deposit Insurance Corporation) so your Oaken savings or GICs are eligible for $100,000 coverage per account registration type.

Bonus Savings Interest Rates

Several institutions are offering short term savings rate bonuses on high interest savings accounts, typically sometimes on-line accounts.  Here are the offerings, terms and conditions from a few banks.

CIBC eAdvantage Savings Account let you earn 2.0% interest on new deposits when your balance is $5,000 or more.  Online transfers to other CIBC personal accounts are FREE as are most transactions except sending INTERAC e-Transfers and Non-CIBC bank machine withdrawals ($1.50 fee each).  New deposits mean you can't just transfer money in and out again.  You earn this bonus interest until March 31.

Tangerine has a special offer on Savings Accounts.  You cane earn 2.5% interest until March 31 on new deposits to a Tangerine Savings Account, Tangerine RSP Savings Account or Tangerine Tax-Free Savings Account.  The normal savings interest rates are:

Tangerine Savings Account, Tax-Free Savings Account, RSP or RIF Savings Account, US$ Savings Account 0.25%, Tangerine Children’s Savings Account 1.50%.

Want more? Use this Orange Key 40132831S1 and get a $50 when you become a Tangerine saver, plus an additional $25 Bonus you set up an Automatic Savings Program (ASP) into a Tangerine Savings Account.

Not interested in Bonuses? Other institutions offer just over 2% on a permanent basis - check out this list: Best Canadian Savings and TFSA Rates

Best Savings Rates

Here is a list of savings rates at banks, credit unions and online institutions as of January 6, 2015.

Able Banking  1.00%
Alliant Credit Union  0.80%
Ally Bank  0.99%
Amboy Direct  0.65%
American Express Personal Savings  0.85%
Bank of Internet USA 0.61%
Bank5 Connect  0.90%
Barclays Bank  1.00%
California First National Bank  0.50%
Capital One 360  0.75%
Capital One  0.75%
Charles Schwab Bank  0.12%
Citizens National Bank  0.26%

Best CD Rates - Certificates of Deposit

Here is a current list of 6 month to 10 year CD interest rates as of January 6, 2015. Use Ctrl F to search for your bank or credit union in the list.  These are available nationwide and are insured.

MidFirst Direct  10 Year CD 3.00%
MidFirst Direct  7 Year CD 2.75%
Apple Federal Credit Union  7 Year CD 2.40%
Melrose Credit Union 5 Year CD 2.37%
CIT Bank  5 Year CD 2.30%
Discover Bank  10 Year CD 2.30%
Nationwide Bank  5 Year CD 2.25%
EverBank  5 Year CD 2.25%
Barclays Bank  5 Year CD 2.25%
MidFirst Direct  5 Year CD 2.25%
Synchrony Bank  5 Year CD 2.20%
Discover Bank  7 Year CD 2.20%
Discover Bank  5 Year CD 2.10%