CIBC has cut some sizzle from its popular “Mortgage Switch” campaign.
It has reduced the variable-rate discount to prime – 0.40% (from prime – 0.50%) and eliminated the promotional 3% cash back option on variable mortgages over $400,000.
These changes apply in all of CIBC’s distribution channels (i.e., Mortgage Centre brokers, CIBC branches, and CIBC/Home Loans Canada mortgage professionals).
“We continue to offer the CIBC Mortgage Switch offer which has gained significant traction and helped to attract new clients to CIBC through retail and broker channels,” says CIBC spokesperson, Rob McLeod.
As such, 2% cash back is still available for switches under $400,000 where the customer is taking a Variable Flex Mortgage or a 3, 4, 5, 7, and 10-year fixed-rate mortgage.
3% cash back is still available on fixed mortgages over $400,000.
Prior to this change, CIBC’s effective rate on $400k+ variables was better than prime – 1.1% (if, and only if, you used the cash back to immediately prepay your mortgage). Now, CIBC’s variable-rate with 2% cash back has little mathematical edge over a typical prime – 0.85% variable.
On a $400k+ five-year fixed, it’s a different story. CIBC’s effective rate is below 3.30%, which is exceptional if you’re 100% certain you won’t break your mortgage for five years. (Keep in mind, people refinance five-year terms in roughly 3.5 years on average.)
As we’ve reported before, however, there is a serious potential downside to CIBC’s cash back special. It comes with a 100% clawback of the cash back (in addition to the prepayment penalty) if you break the mortgage even a single day early.
Mind you, you can do an increase and blend and also port the mortgage to a new property. By doing so, you can potentially avoid the brutal clawback.
CIBC’s Switch promotion is accessible through Mortgage Centre Canada, Home Loans Canada, and CIBC Mortgage Advisors. It only applies to applicants closing in 30 days or less. Pre-approvals are not available.
Contact your mortgage professional for complete details.
Rob McLister, CMT
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