If you’re a FirstLine fixed-rate mortgage customer, this info may be helpful.
Now that FirstLine has stopped selling new mortgages, there is a question of how it will set its rates going forward.
This may not matter to most, but it is definitely relevant to those planning to refinance or switch their FirstLine mortgage early.
The reason it matters is because FirstLine’s future rates will impact its interest rate differential (IRD) charges. As most of you know, IRD “penalties” sometimes apply to people who terminate a fixed-rate mortgage before maturity. (The penalty is usually the greater of three month’s interest or IRD.)
CIBC says that, going forward, the “posted (a.k.a. “ceiling”) rates for FirstLine Mortgages will be (set) in line with the approach we had taken over the last year when we were actively accepting new applications.”
If so, that’s something positive because FirstLine’s rates have been above-market for at least a year. The higher the comparison rate, the lower one’s IRD charge.
A spokesperson from the bank adds, “…Our stated goal is to retain FirstLine Mortgages clients in our CIBC brand as part of a broader relationship with them.”
In turn, we’d expect CIBC to make FirstLine’s penalties less severe for certain customers who refinance with CIBC. (Although, we don’t actually know if, or how frequently, that will be the case going forward.)
Two other tips:
- From now on, you’ll be able to check FirstLine’s rates at: http://www.firstline.com/PDFs/printrat.pdf.
- If you need to estimate your penalty, FirstLine will provide a quote if you call 1-800-970-0700. It will then likely be in your best interest to call your broker and compare refinance options from all lenders.
Rob McLister, CMT
Anyone know the current status of that class action suit against CIBC and their subs regarding erroneous IRD penalties?
This policy of using the posted rate as a comparison seems very fair, considering they are probably lending the money out at rates lower than the posted.
Seem like the big bank is treating their customers fairly. At least, this one time:)
Or did I get this wrong?
Hi Banker, The latest I heard is that the next step is to certify the class action. A certification hearing date will be requested this fall in B.C. I’ll post more once I hear anything. Cheers….Rob
Not really — CIBC is scandalous with reference to mortgage breakage penalty. It explains why they are being sued. One example is the 3 month interest calculation. Pretty simple right ? Calculate 3 month’s interest based on the contracted mortgage rate. This methodology was established by CMHC years ago. However CIBC decides to rip clients off by using the posted rate when calculating 3 months interest. When confronted about this CIBC’s response was we do it because it is in the contract and we can. Great client relationship — we rip you off because we can. With that kind of culture my response is I do not ever deal with you because I do not have to.
How does one get involved in the class action lawsuit against CIBC/Firstline?
I was wondering if anyone eles mortgage went up over 100 dollars last year sometime around April? Did anyones go down i have owned my home 24 years and never had increase like this.