CIBC Mortgage Rates

About Canadian Imperial Bank of Commerce (CIBC)

The Canadian Imperial Bank of Commerce, or CIBC for short, is one of Canada’s Big Six banks boasting 11 million clients globally. The bank employs more than 50,000 employees throughout its 1,076+ branch locations located in Canada, the U.S., the Caribbean, Asia and the UK.

The bank became known as the Canadian Imperial Bank of Commerce in 1961 following the merger of the Canadian Bank of Commerce, which was founded in 1867, and the Imperial Bank of Canada, founded in 1873.

The bank was a pioneer in mobile banking, becoming the first of Canada’s chartered banks to launch a mobile banking app in 2010. It has since been recognized for its mobile and online banking functionality by Forrester Research

CIBC fixed rate mortgages

CIBC offers a variety of fixed-rate mortgages from a short-term mortgage of just six months, to decade-long mortgage terms.

The most popular of all is CIBC’s 5-year fixed rate, which balances a competitive rate (for a big bank) with a medium-length term, which many borrowers prefer, so as to avoid regular renewals.

CIBC’s fixed mortgage rates come with inferior prepayment options compared to other banks (and CIBC’s variable rate mortgages). They entail a restrictive 10% lump sum prepayment option each year (many other banks allow up to 20%), and a 90-day hold, whereas other banks and CIBC pre-approvals come with a 120-day rate hold.

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CIBC variable rate mortgages

There are two key reasons why a borrower would opt for a floating-rate mortgage:
 

1. They expect rates to stay low or fall, in which case borrowing costs would drop over time.
2. They may expect to break their mortgage early and prefer the lower prepayment charges that come with a variable rate.

CIBC offers clients three variable-rate mortgage products: its CIBC Variable Flex Mortgage (3- and 5-year closed terms), and its CIBC Variable-Rate Open Mortgage (5-year term).

Its Flex Mortgage gets its name from the added flexibility provided in the form of higher prepayment privileges (20% lump sum payment of your original mortgage principal and up to a 100% increase in your regular payment amount).

Payment frequency options include bi-weekly, semi-monthly or monthly.

An added benefit of a CIBC variable rate mortgage is the ability to opt for fixed-payments. This means that if rates were to rise or fall, your monthly mortgage payment would remain the same, while the amount going towards interest payment would fluctuate.

One knock against CIBC variable-rate mortgages is that the bank bases its prepayment penalties on a higher rate than most lenders: prime rate (as opposed to the borrower’s lower contract rate). In some cases, that can cause penalties to be up to $1,000 more per $100,000 of the mortgage balance.

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Historical CIBC mortgage rates

 

Mortgage rates remained stable but at historically low levels during the first half of 2021 because of a period of low interest rates set by the Bank of Canada. With the economy recovering later that year, inflationary pressure began to mount and mortgage rates increased in the second half of 2021. One reason for this could be financial lenders speculating that the central bank raises interest rates in the future. This came true in 2022, when mortgage rates continued to rise, but at a slower pace than in the second half of 2021. The Bank of Canada decided to increase overnight rate eight times to curb inflation, which had reached a historically high level. In 2022, the central bank raised its overnight rate eight times pushing banks to increase their prime rate and mortgage rates which in turn slowed down borrowing. However, since interest rates have stayed stable so far in 2023, the bank is witnessing growing interest in borrowing and the housing market is picking up pace as well.

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CIBC Home Power Plan - Home Equity Line of Credit (HELOC)

For those needing to tap into their home equity for a major purchase or financial emergency, CIBC offers its Home Power Plan, a mortgage and home equity credit line rolled into one.

The CIBC Home Power Plan functions as a re-advanceable mortgage, where the borrower’s line of credit grows automatically as the mortgage is paid down. Like similar products from the other banks, homeowners can access up to 80% of the value of their home, although only 65% can be in the form of a revolving credit line.

On the credit line portion, you only have to pay the interest each month. The mortgage portion has regular amortizing payments, and as the balance is paid down, your available credit automatically increases on the line of credit. HELOCs are commonly used to fund large renovation projects, for post-secondary education, as an alternative to emergency cash funds and for investment purposes, to name just a few uses.

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Historical CIBC HELOC rates from 2015-2023

CIBC is offering its Home Power Plan Line of Credit at the same rate as its CIBC Prime rate at 6.70%, until December 3, 2023.

Between 2022 and 2023, the Bank of Canada increased its overnight rate almost eight times starting in March, triggering a drastic change in mortgage interest rates. Banks have increased their prime rate because of the BoC overnight rate change which has slowed down borrowing. CIBC increased its prime rate by almost 4 points from January 2022 to January 2023, year-on-year. While BoC rate was 0.25 in January 2022, CIBC prime rate was 2.45% which increased to whopping 6.70% in January this year.

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CIBC’s mortgages for newcomers

Newcomers to Canada have myriad options to look at when purchasing a home, especially with the Government of Canada promoting it’s First-time Home Buyer incentive. Almost all the country’s six big banks offer special banking services to newcomers to Canada, including CIBC. With the CIBC Newcomer to Canada Program Mortgage and CIBC Foreign Worker Program Mortgage, those with no Canadian credit history can still participate in the dream of Canadian homeownership.

The Newcomer to Canada Program is limited to those who have been permanent residents of Canada for five years or less, while the Foreign Worker Program is limited to temporary residents with a valid Canadian work permit of 12 months or longer.

Applicants for these specialty programs may not get CIBC's absolute lowest mortgage rates and generally have to make higher down payments, like 35%.

CIBC’s real estate secured personal lending comprises residential mortgages, and personal loans and lines secured by residential property. This is lower risk compared to other retail portfolios, as the bank has a first charge on majority of the properties and a second lien on only a small portion of the portfolio. This means the bank has a right to keep possession of property belonging to a borrower until a debt owed by that person is discharged.

CIBC witnessed an increase in the duration of the amortization period, which is driven by the prime rate increases that commenced earlier in 2022, impacting borrowers with a variable rate mortgage. The increase in interest rates had no impact on the remaining amortization period for fixed rate mortgages which in the current interest rate environment are assumed to be renewed at the same or a shorter amortization period.

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