BOC Sept 6 Rate Announcement...
- Last Updated:
- Sep 12th, 2017 10:36 am
Tags:
- SCORE
- Conquistador [OP]
- Deal Fanatic
- Feb 19, 2010
- 6237 posts
- 2992 upvotes
44 replies
- agit
- Sr. Member
- Jan 23, 2009
- 946 posts
- 1932 upvotes
- Ontario
Bank of Canada increases overnight rate target to 1 per cent
http://www.bankofcanada.ca/2017/09/fad- ... 017-09-06/
will saving account move up?
http://www.bankofcanada.ca/2017/09/fad- ... 017-09-06/
will saving account move up?
- treva84
- Deal Fanatic
- Nov 9, 2013
- 5877 posts
- 7458 upvotes
- Edmonton, AB
That's quite the raise.
Buy quality. Keep calm and go long (and note to self STOP SELLING).
- Dpack22
- Deal Addict
- Mar 16, 2010
- 3326 posts
- 1885 upvotes
- Sumba
- Newbie
- Dec 26, 2007
- 88 posts
- 34 upvotes
Hope EQ, Tangerine & Meridian increase their Savings/GIC rates accordingly - wishful thinking may be?
- Dpack22
- Deal Addict
- Mar 16, 2010
- 3326 posts
- 1885 upvotes
Wrong question. Will savings accounts move up by the same amount as the rate increase?agit wrote: ↑ Bank of Canada increases overnight rate target to 1 per cent
http://www.bankofcanada.ca/2017/09/fad- ... 017-09-06/
will saving account move up?
Protip; they won't.
- jerryhung
- Deal Expert
- Sep 19, 2004
- 26761 posts
- 9330 upvotes
- where I belong
+0.25% in July
+0.25% in Sept
CAD is 2-year high and higher
Good economy, but you don't see gains in Energy or RE or etc... definitely not TSX market
+0.25% in Sept
CAD is 2-year high and higher
Good economy, but you don't see gains in Energy or RE or etc... definitely not TSX market
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- dlhunter
- Deal Fanatic
- Jun 27, 2007
- 5507 posts
- 1956 upvotes
so the question of the day, as BOC keeps raising rates, at which point doing Smith Maneuver becomes too expensive to implement?
as of now, HELOC @ 3.7% and dividends from big 6 banks around 4%
as of now, HELOC @ 3.7% and dividends from big 6 banks around 4%
Last edited by dlhunter on Sep 6th, 2017 10:13 am, edited 1 time in total.
It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃
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- STP123
- Deal Addict
- May 25, 2008
- 1615 posts
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- Toronto
Well, its affecting the bond market: Canada 3 month +10%, Canada 5 Year +4.7%, 10 year +3.4%.
- choclover
- Deal Fanatic
- Oct 7, 2007
- 9404 posts
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It's good to see rates heading towards normality although we have a long ways to go and hopefully we don't reverse course in the process.
- Mike15
- Deal Fanatic
- Nov 24, 2013
- 6479 posts
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- Kingston, ON
With SM, the interest is tax-deductible, so depending on your bracket the net cost of borrowing has gone from ~2.43% to ~2.60% (that's the broad middle bracket in ON, even lower for higher incomes). Bank dividends also grow, so ~4% yield is only for new purchases. Shares bought with last year's capital are probably yielding 5%+ already.
- kulb
- Deal Addict
- Feb 24, 2008
- 2331 posts
- 826 upvotes
Banks will not waste time to pass on the rate hike to their variable mortgage customers. However, don't expect a corresponding increase in savings account rates.
- MehtabS
- Deal Addict
- Feb 25, 2014
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- Mississauga
- choclover
- Deal Fanatic
- Oct 7, 2007
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- zod
- Deal Guru
- Mar 12, 2005
- 11677 posts
- 3487 upvotes
- Victoria
Fair enough. The two BoC decreases of .25% were matched by the banks at only .15%. The last increase followed the BoC increase of .25% completely. I'm betting this one will too... meaning variable customers will end up paying .2% than they were expecting. By dropping the rate so low the BoC gave the banks room to permanently raise their prime rate.
I expect savings rates to not keep pace. I think they only went up about .1 or .15 the last time the BoC raised .25. They'll passed on the full rate for borrowing, but not for saving.
I expect savings rates to not keep pace. I think they only went up about .1 or .15 the last time the BoC raised .25. They'll passed on the full rate for borrowing, but not for saving.
- xgbsSS
- Deal Fanatic
- May 11, 2014
- 6582 posts
- 9090 upvotes
- Rankin Inlet, NU
I really would not be surprised if banks increase prime by 0.30% just to make the number look nicer and to tack on another 0.05%. 3.25% instead of 3.20%
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- Mike15
- Deal Fanatic
- Nov 24, 2013
- 6479 posts
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- Kingston, ON
- xgbsSS
- Deal Fanatic
- May 11, 2014
- 6582 posts
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- Rankin Inlet, NU
Yes, although 2.95% sounds like some store pricing, so maybe that's why they left it as is :P
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- angel_wing0
- Moderator
- Mar 23, 2004
- 47725 posts
- 13890 upvotes
- Markham
Oh great another rate raise...
- Guest37273939
- Deal Addict
- Jul 27, 2017
- 2180 posts
- 950 upvotes
@Mike15, I cannot get my head around how the numbers flush out net?Mike15 wrote: ↑ With SM, the interest is tax-deductible, so depending on your bracket the net cost of borrowing has gone from ~2.43% to ~2.60% (that's the broad middle bracket in ON, even lower for higher incomes). Bank dividends also grow, so ~4% yield is only for new purchases. Shares bought with last year's capital are probably yielding 5%+ already.
Ignoring any capital appreciation, is it that for the average middle of the road income tax bracket investor doing the SM the net after cost return ROI using OPM is approx 2% or less?
If it is 2% net in pocket, then on $100k of Heloc $2k/yr return investing in something that has volatility doesn't seem a good idea or maybe it is?
Last edited by Guest37273939 on Sep 6th, 2017 2:19 pm, edited 1 time in total.
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