Why High-Interest Savings Accounts Are Losing Out to MICs in 2025: A Deep Dive for Yield-Focused Investors
Investors Are Looking Beyond the “Safe” Choice
With the Bank of Canada holding its key interest rate at 2.75% as of August 2025, high-interest savings accounts (HISAs) continue to be marketed as attractive “low-risk” options. Many Canadians, especially conservative investors and savers, are leaning toward these accounts for the promise of principal safety and easy access.
But is that enough?
Despite being labeled “high-interest,” many HISAs offer returns in the range of 3.5% to 4%—barely keeping pace with inflation and often falling behind after taxes. For those seeking genuine income growth, the limitations of HISAs are becoming increasingly evident.
Enter Mortgage Investment Corporations (MICs)—a professionally managed, real estate-backed investment vehicle designed to generate steady returns through diversified mortgage lending. In 2025, MICs are not just an alternative—they’re a strategic upgrade.
Explore: Short-Term MICs vs. GICs: Smarter Yield Strategies in Canada’s 2.75% Rate Era
The Yield Gap: HISA vs. MIC
HISAs are known for safety and liquidity—but the trade-off is performance. With inflation hovering above 3%, a return of 3.75% offers little real growth. Once income taxes are applied, many investors are seeing net returns close to zero in real terms.
MICs, on the other hand, provide access to secured, income-generating mortgages through a diversified lending pool. The typical annualized returns range between 7% and 11%, depending on the structure and risk profile. While MICs don’t offer daily liquidity like HISAs, they are structured to provide regular distributions—often on a monthly or quarterly basis.
The key difference lies in capital utilization. HISA funds are largely absorbed into the bank’s balance sheet, earning the institution profits through lending spreads. In contrast, MICs place investor capital directly into real estate-backed mortgages, where investors themselves earn the lending income.
See also: How Investors Generate Income With Mortgage Investment Corporations (MICs)
Risk Considerations: Perceived vs. Actual
It’s easy to associate MICs with higher risk simply because they’re not CDIC-insured like HISAs. However, the actual risk profile of a well-managed MIC is grounded in several protective layers:
- Mortgages are secured by real property
- Loan-to-value (LTV) ratios are conservatively capped
- Portfolios are diversified across borrower types and regions
- Underwriting and risk assessment are professionally managed
By contrast, HISAs—though insured—offer little to no return growth, making them more suitable as temporary parking accounts rather than long-term income tools.
Helpful read: Are MICs Better to Choose Over Private Mortgages?
The Opportunity in Today’s Real Estate Lending Market
Private lending is gaining ground in British Columbia and other Canadian regions where traditional financing doesn’t fully meet borrower demand. MICs are filling the gap by offering mortgages to:
- Self-employed individuals
- Small-scale developers
- Asset-rich but credit-constrained borrowers
This allows investors to access high-quality, real estate-secured lending that traditional banks often bypass. MICs are not only offering higher yields, but also greater transparency and reporting than many realize.
Explore: How Do Interest Rates Affect Mortgage Pool Investments?
MICs as a Passive Income Strategy
For investors who prioritize steady income without the complexity of managing real estate or reacting to market swings, MICs are an increasingly popular fit. Interest collected from borrowers is pooled and distributed to investors, often on a monthly or quarterly basis. This creates a recurring income stream that aligns well with retirement planning or cash flow-focused investing.
Unlike rental properties, MICs do not involve tenant turnover, maintenance issues, or vacancies. The mortgages are selected, managed, and monitored by professionals—freeing investors from operational concerns while still benefiting from exposure to real estate.
Further reading: Boost Your Investment Returns With Versa Platinum
Liquidity vs. Performance: Finding the Balance
One of the most common arguments in favor of HISAs is liquidity. It’s true that funds in a high-interest savings account are accessible on demand—but that accessibility comes at a cost: low returns. MICs typically offer quarterly or scheduled redemption periods, which are adequate for most medium-term investment plans.
When evaluating liquidity needs, many investors realize that 100% access at all times isn’t necessary—especially if the trade-off is leaving potential income on the table. For capital not needed in the short term, MICs strike a balance between reasonable access and enhanced performance.
Regulatory Oversight and Transparency
MICs in Canada operate under the Income Tax Act, and are typically structured to distribute 100% of net income to investors. Many, including Versa Platinum’s, are also:
- Audited annually
- Governed by professional administrators
- Registered with provincial securities commissions
This regulatory framework enhances transparency and investor confidence. While MICs aren’t insured by CDIC, they are secured by real estate, and portfolios are designed to minimize concentration risk and exposure to any single borrower.
Learn more: How MICs Work
When Does a HISA Make Sense?
While HISAs serve a purpose for emergency savings and short-term cash needs, they are not structured for wealth growth. For investors with medium- to long-term goals, the real opportunity lies in strategic capital deployment—where cash works harder without exposing the portfolio to excessive volatility.
By allocating a portion of their capital to a professionally managed MIC, investors can enjoy the benefits of passive income, real estate exposure, and consistent returns—without sacrificing oversight or structure.
See also: How Investors Generate Income With MICs
Final Thoughts: Reframing “Safety” in a 2.75% Economy
In today’s economic climate, the definition of a “safe” investment is evolving. For many, the traditional approach of leaving funds in high-interest savings accounts no longer aligns with their financial goals.
While HISAs offer capital preservation, they often fail to generate real returns after inflation and tax. MICs, by comparison, provide access to real estate-secured income, managed by professionals, and aligned with modern portfolio goals.
Interested in learning more? You can explore MIC investment opportunities designed for Canadian investors through Versa Platinum.
Frequently Asked Questions
What is a MIC, and how does it compare to a HISA?
A MIC is a professionally managed mortgage pool that lends to real estate borrowers and distributes interest income to investors. Unlike a HISA, which prioritizes liquidity with minimal yield, a MIC focuses on income generation backed by secured mortgages.
Is my capital safe in a MIC?
MICs are not insured by CDIC, but they are secured by real property and structured with risk controls such as conservative loan-to-value ratios and diversification. Reputable MICs are also audited and regulated.
What kind of returns can I expect?
Returns vary by MIC but typically range from 7% to 11% annually, net of fees. Returns are often distributed monthly or quarterly.
Can I redeem my investment at any time?
MICs usually offer redemptions on a scheduled basis (e.g., quarterly), not daily like a HISA. This makes them better suited for medium-term goals rather than day-to-day cash access.
Who should consider a MIC?
MICs are ideal for investors seeking passive income, real estate exposure, and a higher yield than traditional fixed-income products—without the volatility of public markets or the responsibilities of direct ownership.
