Mortgage Centre Gets CIBC CashBack Variable & Wealth Builder

Mortgage-CentreA key benefit of being a Mortgage Centre broker is having access to CIBC branch products. That benefit has recently improved with the addition of two more options.

Mortgage Centre brokers can now offer:

CIBC’s Wealth Builder Option

  • Meant to build savings while one pays down his/her mortgage
  • Up to 140 bps off posted fixed rates plus 0.25% cash back at closing and $100 cash back each quarter, OR 145 bps off posted fixed rates plus $100 cash back each quarter
  • A variable-rate option is also available

  • More info: CIBC Wealth Builder Mortgage
  • Our take:  The effective rate as of today (assuming you pre-pay your mortgage with the cash back) is roughly 3.75% on a $200,000 mortgage. Not bad given that 5-year rates are in the 3.89% neighbourhood at the moment. Just keep in mind, there is a 100% clawback of the up-front cash-back (i.e. the 0.25%) if you break the mortgage before maturity.

CIBC’s Variable Flex Mortgage With Cash Back

    • A variable-rate mortgage at prime – 0.50% plus 2% cash back (or 3% for mortgages over $400,000)
    • The fine print: CIBC’s cash-back offer must close in 30 days, is not available on purchases and there is a 100% clawback on the cash-back if you break the mortgage even one day early.
    • In the event you move, you can port and increase
    • Our take:  The 2% cash-back option has a good effective rate (assuming you take the cash-back and use it to pre-pay your mortgage right away). Many people, however, will be better off in an unrestricted variable at prime – 0.85% or so.

The 3% cash-back variable is much more compelling. You won’t find a lower effective rate on a variable product. A Mortgage Centre contact told us it’s the equivalent of prime – 1.1%. By our math, the effective rate is slightly better than that. This product therefore presents a niche competitive edge for MC brokers.

  1. What commission does this pay the MC broker? That’s an awfully expensive acquisition for CIBC if you add on bps for the broker to boot.

  2. HLC brokers have access to this as well, and its also possible to get it on a purchase.I think the variable option will be a hot seller. It’s a bit of a niche because of the clawback, but in my mind it’s just like any other value mortgage: less flexibility in exchange for a lower rate. All that being said, 1.1% off prime does sound pretty good :-)

  3. CIBC told me that purchases qualify for a different cash back program and it’s not as good. This deal is only for switches and refinances they say.

  4. also if they switch or refinance their mortgage at a later date and decide to go to another lender they will have to pay the cash back premium back to the lender. It may be better to take prime -.85 and avoid the cash back clause

  5. Way too much risk for the consumer to take a rate that is as much as .40% higher than the street. I am positive the capital markets guys are banking on early breaks and recouping that upfront cash. We all know clients break early, and what happens when prime jumps and they want to move into a fixed rate environment? Cant shop, and get jammed on the move over. A good broker will do his homework and make sure the client is aware of the huge costs, all to save a couple grand. Miles

  6. Hi Miles,
    Appreciate the post. You’re absolutely right that CIBC has factored clawbacks and conversions into the pricing, or so they should. One way or another, borrowers usually pay for below-market discounts.
    These are certainly niche products and not suitable for all. Personally speaking, the 2% cash-back isn’t that compelling. The 3% cash back option is compelling, especially on the 3-year fixed. The caveat is that it must be the right type of borrower.
    The “right type” is someone who uses the cash back to make an immediate pre-payment (or pay off high interest debt), has a good personal “balance sheet,” foresees no chance of breaking early, and has no need to convert to a variable rate.
    As side note, these products are portable. In addition, according to CIBC reps we spoke with, you can also do increases and blends with no clawback of the cash back.

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