CIBC Pilots New Home Power Plan

CIBC-BankFor years, CIBC has been the only Big 6 bank without an automatically readvanceable mortgage.

That’s put it at a competitive disadvantage to its peers in the HELOC market for far longer than anyone would have expected.

But now, it’s finally filling that gap with a new version of its Home Power Plan (HPP).

The new HPP is modelled after the Matrix, a readvanceable mortgage from CIBC’s soon-to-be-dismantled FirstLine division.

Like the Matrix, it will reportedly have two parts, a mortgage portion and one line of credit (LOC) account.(It would be more appealing with two or more LOC accounts—so you could separate business/investment borrowing from personal borrowing. But one LOC is better than none.)

Like all auto-readvanceables, as you pay down principal on the mortgage portion, your available credit in the LOC will immediately increase by an equal amount. That’ll make the product compatible with leveraged investing strategies like the Smith Manoeuvre.

The HPP will officially launch later this year, says CIBC. It is currently being piloted in more than 40 branches across the country.

When it formally rolls out, there’s speculation that CIBC may offer it with a free legal/appraisal package and integrated online banking, but CIBC couldn’t confirm that at this time.

There’s also no word on what loan-to-value the new product will officially launch with. Banking regulator OSFI is expected to cap HELOC LTVs at 65% later this year. (See: 65% LTV HELOCs)

Rob McLister, CMT

  1. Am I the only one to think that CIBC always does the wrong thing at the wrong time? .com, Enron, subprime, etc…

  2. If you’re trying to imply that launching a better HELOC is “wrong,” then you are definitely in a tiny minority.

  3. Ummm, yes?
    You don’t make 3B a year by ALWAYS doing the wrong thing! Not that I’m holding up CIBC as some beacon of corporate excellence, but your comment seems a bit over the top.
    Regarding the readvanceable HELOC, CIBC has been lending with this product for years, its called the Firstline Matrix! So now that there is no more Firstline, they would be crazy NOT to roll this out though the CIBC brand!
    Anyway, my 2c…

  4. “You don’t make 3B a year by ALWAYS doing the wrong thing!”
    Easy, by being a part of the oligopoly! $3B sounds impressive, but would they have made even more if they didn’t commit those mistakes? For proof, compare their long-term ROE to the other CDN banks.
    And you have to wonder why they decided to shut down Firstline in the first place.

  5. Is there a fixed ratio for how much is traditional mortgage vs how much is a HELOC. Can the whole thing be a heloc?
    What amount do they register on the title? Do they go over the appraised amount by a few hundred thousand like I believe TD does?
    Basically wondering if they register the mortgage at say 700, if the house is appraised for 500. Allowing for no additional legal paperwork to be done, just a new appraisal as the value increases.

  6. Registration would be on 100% of the value of the property – if the property is valued at $500K then the registration would be for $500K.
    HELOC can only be 65% of the total value, mortgage can go to 80%.

  7. Has anyone got any other details about this account such as if there are any preferred mortage rates, equal to prime? Service charges? I have a HELOC with Manulife now which has been set at their version of “Prime” which has been 3.5% for years now, and there is a $14/month service charge. If CIBC can offer a better rate, I’d switch right away.

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