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It was just about a year ago that the interest rate on guaranteed investment certificates hit the 5-per-cent mark. This summer, we could see 6 per cent.

Rates on GICs were as high as 5.65 per cent at deposit brokers late this week and 5.6 per cent at alternative banks operating online. An increase to 6 per cent is possible, but by no means assured. Here’s how it could happen.

First, we need rates in the bond market to hold at current levels or increase. We’re looking good here because bond yields did rise this week, adding to gains in June. Bond yields have a big influence on GIC rates, but there are other considerations as well.

One is what the Bank of Canada says and does on July 12, which is the next opportunity for the overnight rate to be adjusted. The overnight rate is both a benchmark for many borrowing costs and an indicator of the latest thinking about inflation. If the overnight rate goes up and the bank expresses continuing concern about inflation, then GIC issuers may feel there’s justification to bump up GIC rates from current levels.

Another factor in GIC rates is the state of the housing market. Money raised through the sale of GICs is commonly used to fund mortgages. If demand for mortgages is strong, then GIC issuers might feel motivated to increase rates to attract money they can lend out.

Housing had a strong spring, with both sales and prices on the rise. But June sales in Toronto showed a loss of momentum that has been tied to concern about higher borrowing costs. On the other hand, high levels of immigration provide support to the housing market.

Deposit brokers are your best bet for capturing top GIC rates. On the Canadian High Interest Savings Bank Accounts website at, a trio of deposit brokers are routinely shown with better rates than individual alternative banks. To find a broker near you, use the search engine offered by the Registered Deposit Brokers Association at

Next, try alternative banks like Motive Financial and EQ Bank, which have been rate leaders in recent weeks. Online brokers sell third-party GICs to clients, but the rates are often less than you can get by dealing directly with an online bank.

The least productive way to get the best GIC rates is through the big banks. Bank of Nova Scotia had a featured rate of 5 per cent on a two-year GIC at mid-week, but the others have so far shown iron discipline in staying below 5 per cent. The best rates late this week, Scotiabank aside, was 4.75 per cent for a one-year term at Canadian Imperial Bank of Commerce and Royal Bank of Canada, and for 18 months at Bank of Montreal.

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