With interest rates rising in the US, and an expectation that the Bank of Canada will raise rates during the remainder of 2018 (including an expected July raise), Canadian high interest savings accounts issuers, have mostly settled into offering rates at 1.10%. The exceptions are Home Trust & B2B Bank which are at 1.15%.
Since Bank of Canada raised benchmark rates a few weeks ago, by this time, all the major HISA issuers in Canada have updated their corresponding rates. The average rate on a high interest savings account that can be purchased through the brokerage channel is now 0.95%. Yes, still less than 1%, but 10 bps higher than it had been before the Bank of Canada raised rates.
The standout rate among those that I follow is Home Trust HISA which is currently offering 1.00%. This rate has dropped slightly and the spread between this rate and competitors has narrowed since Berkshire Hathaway took a position at the lender. Also, at the recent shareholders meeting to decide whether to issue more shares to Berkshire chose, the shareholders voted not raise more capital. This gives Berkshire more limited control of the company going forward, and also signals to the market that the lender has found better liquidity. This is also evidenced by the rate being offered on Home Trust HISAs.
I just reviewed the Canadian High Interest Savings Account rates. Not much has changed over the past year, the major banks are still at 0.75%. The only other issue to mention is about being cautious with issuers when your deposit is more than $100,000. Recent events with Home Capital have illustrated the importance of diversification and not chasing returns too aggressively. Even though interest rates are low, this is the reality, and an excessive hunt for yield will lead a reckless investor to losses.