CIBC recall HELOCs

[TomRebstock]

I was negotiating with a President`s Choice representative about an HELOC.

I heard something unsubstantiated from a person who`s reputation is unknown to me.

The sales staff member told me that the CIBC she was informed that by April 1st letters to customers are going out to increase EXISTING HELOC mortgages at prime by re-issuing them to HELOC mortages at prime plus one.

To me this means they`d have to call in the loan and re-issue a re-placement loan.

Is anybody hearing anything remotely like this ?

Tom Rebstock
Oakville, ON

 

[mortgageman]

I heard from a realtor who has a client with a HELOC at BMO. Apparently BMO is bumping up the rates on his client`s existing HELOC.

 

[lanedry77]

This is true.

I just received a notice in my monthly statement that rates were going up 1.00% on CIBC HELOCs.

The notice says the following;

Effective April 6, 2009, the annual variable interest rate will increase by 1% and will apply to all amounts owing on PLCs. The annual interest rate for PLCs is determined as CIBC Prime plus a variable interest rate.
This change is a result of global credit market conditions that have increased costs associated with lending products. Interest rates for PLCs opened after October 11, 2008 are not affected by this change.
If you have any questions about your PLC or would like assistance in reviewing your borrowing needs, please contact your Advisor, CIBC branch, or call us at 1 877 299-2358.

Although I`m disappointed that they`re doing this, I`m not surprised and not overly worried as a 1.00% increase is only an extra $83.33/month on a borrowed $100,000. That`s still dirt cheap money!

And if you put this into context of the greatly reduced prime rate, it`s even less of a deal for everyone that has adjusted their payment on variable rate mortgages (which put an extra $1000/month into my pocket on just two properties).



David.

 

[TomRebstock]

Thanks David. I hadn`t seen anything in writing, thanks for including your details. No the 1% doesn`t concern me much. But it`s a factor as I go forward.

Thanks for the word.

I`m just reading your Jan 09 article. Nicely done !

Good luck.


This is true.

I just received a notice in my monthly statement that rates were going up 1.00% on CIBC HELOCs.

The notice says the following;

Effective April 6, 2009, the annual variable interest rate will increase by 1% and will apply to all amounts owing on PLCs. The annual interest rate for PLCs is determined as CIBC Prime plus a variable interest rate.
This change is a result of global credit market conditions that have increased costs associated with lending products. Interest rates for PLCs opened after October 11, 2008 are not affected by this change.
If you have any questions about your PLC or would like assistance in reviewing your borrowing needs, please contact your Advisor, CIBC branch, or call us at 1 877 299-2358.

Although I`m disappointed that they`re doing this, I`m not surprised and not overly worried as a 1.00% increase is only an extra $83.33/month on a borrowed $100,000. That`s still dirt cheap money!

And if you put this into context of the greatly reduced prime rate, it`s even less of a deal for everyone that has adjusted their payment on variable rate mortgages (which put an extra $1000/month into my pocket on just two properties).



David.

 

[lanedry77]

QUOTE (TomRebstock @ Feb 28 2009, 11:54 AM) I`m just reading your Jan 09 article. Nicely done !
Thanks Tom!



David.

 

[TommyK]

Yes, it is true that most lenders/banks are "re-pricing" their existing LOC (either unsecured or HELOC).

I work for HSBC Bank Canada, and we are also in the process of increasing HELOC interst on most clients.

Most LOC agreements have a clause that allows the bank to increase interest rate with suffiicient notice (usually 30-day written notice by mail).

So the only thing that is certain is fixed-term mortgage. And these days your credit score is more important than ever since all unsecured LOC is priced based on your credit score.

 

[lanedry77]

QUOTE (TommyK @ Feb 28 2009, 03:08 PM) I work for HSBC Bank Canada, and we are also in the process of increasing HELOC interst on most clients.
Interesting. So if a client had a strong enough credit score, could this increase be fought? My credit is rather spectacular, if I do say so myself.

David.

 

[GarthChapman]

QUOTE (DavidSandbrand @ Feb 28 2009, 03:22 PM) Interesting. So if a client had a strong enough credit score, could this increase be fought? My credit is rather spectacular, if I do say so myself.

David.

Everything is negotiable. And what have you got to lose.

 

[Nir]

Hello TommyK, you mentioned "most clients".

Just out of curiosity, what is your team`s exception criteria for non-secured LOC clients? certain Balance to limit ratio? credit score? LOC usage? other?

Thanks,
Neil

 

[lanedry77]

QUOTE (GarthChapman @ Feb 28 2009, 07:25 PM) Everything is negotiable. And what have you got to lose.
I guess my one `fear` is they call the loan in, and then I have to move to a different lender. not that I`m worried about that, but it would be a hassle.

but your point is good - I won`t know if I don`t ask!



David.

 

[kanabel]

QUOTE (TomRebstock @ Feb 27 2009, 09:46 PM) I was negotiating with a President`s Choice representative about an HELOC.

I heard something unsubstantiated from a person who`s reputation is unknown to me.

The sales staff member told me that the CIBC she was informed that by April 1st letters to customers are going out to increase EXISTING HELOC mortgages at prime by re-issuing them to HELOC mortages at prime plus one.

To me this means they`d have to call in the loan and re-issue a re-placement loan.

Is anybody hearing anything remotely like this ?

Tom Rebstock
Oakville, ON

TD Bank just raised my interest rate on unsecured one, for an extra 1.5%. It was already crazy prime + 4%, and now it`s prime + 5.50%. I can`t wait to consolidate a bit, and say goodbye to TD forever.

Dejan

 

[Nicola]

QUOTE (TommyK @ Mar 1 2009, 07:08 AM) Yes, it is true that most lenders/banks are "re-pricing" their existing LOC (either unsecured or HELOC).

I work for HSBC Bank Canada, and we are also in the process of increasing HELOC interst on most clients.

Most LOC agreements have a clause that allows the bank to increase interest rate with suffiicient notice (usually 30-day written notice by mail).

So the only thing that is certain is fixed-term mortgage. And these days your credit score is more important than ever since all unsecured LOC is priced based on your credit score.

Hi Tommy,

Does this apply to LOCs on HSBC Equity Power Mortgages? We have two that we got last summer at prime.

Thanks,
Nicola

 

[Nir]

QUOTE (kanabel @ Mar 1 2009, 09:04 PM) TD Bank just raised my interest rate on unsecured one, for an extra 1.5%. It was already crazy prime + 4%, and now it`s prime + 5.50%. I can`t wait to consolidate a bit, and say goodbye to TD forever.

Dejan


Kanebel, I can`t believe they did that to you - prime + 5.50%!? my non-secured with TD is prime + 2. do you have like 450 credit score or did you fall in the wrong hands? I am just trying to understand, if there is any banker here, what criterias the banks are using to decide who should pay more interest(?) LOC Usage? credit score? LOC limit to balance ratio? I actually asked a similar question earlier so perhaps no one here has access to that info.

 

[Thomas Beyer]

QUOTE (kanabel @ Mar 1 2009, 08:04 PM)
TD Bank just raised my interest rate on unsecured one, for an extra 1.5%. It was already crazy prime + 4%, and now it's prime + 5.50%. I can't wait to consolidate a bit, and say goodbye to TD forever.


Banks run a business. Part of a business is increasing revenue, including firing some customers and getting new ones.



If their cost of capital is prime - 1%, i.e. 2% and they used to get a 5% spread .. and now 6.5% .. it is a 30% lift on profit. If 20% of customers leave, they still make money.



It is a FREE CAPITALISTIC WORLD.



Prime being 3% .. 8.5% is lower than a credit card .. WHERE IS THE PROBLEM ?



if you don't like it: switch .. as there are many banks out there !



SHOP AROUND.



No one is forced to lend .. no one is forced to borrow .. let the marketplace decide what is "fair price" !!



Related post on a more difficult lending environment:



http://myreinspace.com/public_forums/Real_Estate_Discussion/62-6908-More_difficult_lending_environment_.html

 

[RobMacdonald]

QUOTE (investmart @ Mar 2 2009, 07:48 PM) what criterias the banks are using to decide who should pay more interest(?) LOC Usage? credit score? LOC limit to balance ratio?

All of the above. Most banks have a complex scoring model that determines the credit risk based on a number of different criteria as mentioned above, and including you relationship with the bank. Generally, the more services you have with one bank, the more likely you would get some `relationship` pricing. Most of the scoring models will give an approval range, and typically there is always some discretion built in.

 

[kanabel]

QUOTE (investmart @ Mar 2 2009, 07:48 PM)
Kanebel, I can't believe they did that to you - prime + 5.50%!? my non-secured with TD is prime + 2. do you have like 450 credit score or did you fall in the wrong hands? I am just trying to understand, if there is any banker here, what criterias the banks are using to decide who should pay more interest(?) LOC Usage? credit score? LOC limit to balance ratio? I actually asked a similar question earlier so perhaps no one here has access to that info.




Hi, last time I checked (month ago) credit score was 699. I have other bank LOC's with higher amounts but lower interest rates, RBC, prime + 1%, and BMO, prime. TD one was just in emergency cases, but unfortunately I might need them now. I can't believe it neither, and I usually cut all ties with such a bank, as I did in the past.



Dejan

 

[Thomas Beyer]

QUOTE (kanabel @ Mar 2 2009, 08:28 PM) Hi, last time I checked (month ago) credit score was 699. I have other bank LOC`s with higher amounts but lower interest rates, RBC, prime + 1%, and BMO, prime. TD one was just in emergency cases, but unfortunately I might need them now. I can`t believe it neither, and I usually cut all ties with such a bank, as I did in the past.

Dejan
I think it is paramount that you have very good relationships with at least 3 banks !!

Yes, drop a few .. but don`t piss them all off !

 

[kanabel]

QUOTE (thomasbeyer2000 @ Mar 2 2009, 08:44 PM) I think it is paramount that you have very good relationships with at least 3 banks !!

Yes, drop a few .. but don`t piss them all off !

Absolutely not Thomas, I will try to shop around more, as with TD is more relationship issue I guess

Thanks for your feedback as always!

Dejan

 

[mortgageman]

I got a notice from TD that my unsecured line of credit was being hiked to prime plus 5.75.
It`s the only account I have with TD and there`s a minimal balance so it may be they are looking to get rid of me. I won`t close the account, I`ll just keep it at zero balance and have it as an emergency source of funds.

 

[Thomas Beyer]

QUOTE (mortgageman @ Mar 2 2009, 09:28 PM)
I got a notice from TD that my unsecured line of credit was being hiked to prime plus 5.75.

It's the only account I have with TD and there's a minimal balance so it may be they are looking to get rid of me. I won't close the account, I'll just keep it at zero balance and have it as an emergency source of funds.


Try ATB .. still @ prime + 1 or prime + 2 for an unsecured LOC / overdraft facility ..