log in
Canada’s fifth-largest bank reportedly has an unpublished 1.49% 4-year fixed special right now.
That’s a new 4-year fixed record-low, and the lowest uninsured fixed rate in the country. It’s also available on default-insured mortgages.
Four-year fixed rates are nowhere near as popular as 5-year rates. They’re an oft-overlooked term with only 1 in 16 Canadians choosing them, according to Mortgage Professionals Canada data.
But they do have one potential advantage. They don’t lock you in as long. That’s key for people who need to break their mortgage before five years. The average 5-year term lasts just 3.8 years in Canada.
A 4-Year vs. a 5-Year
Compared to the lowest nationally available uninsured 5-year fixed, a 4-year at 1.49% would save the average mortgagor $1,617 over the first four years. That’s based on a 25-year amortization and the average mortgage size, which was $286,669 in Q3.
Your renewal rate at month 49 would have to be about 85 basis points higher for the lowest 5-year fixed to have saved you more money, based on interest cost alone. That assumes you hold the mortgage until maturity in each case—an important point given prepayment penalties.
Could rates potentially jump 85 bps in four years? Absolutely. And for that reason some will take a 5-year term instead.
Of course, in four years you could also renew into a variable or one-year fixed. As long as the rate were under 2.33% at the time, you might still do better (i.e., have a lower total five-year borrowing cost) with CIBC’s 1.49% four-year fixed.
But you have to factor in renewal effort and potential switch costs as well. In other words, if CIBC were not to offer you a great renewal rate, you’d potentially have to switch lenders. And that could cost anywhere from $260 (CIBC’s assignment fee last time we checked) to $1,000+ including legal and appraisal fees, if not covered by the new lender.
For these reasons, some will just pay up to lock in for a full five years. But either way, CIBC’s offer is outstanding.
For more details, call a CIBC mortgage specialist or pop into one of their branches. This rate is not available in the mortgage broker channel.
28 Comments
Is this available with simplii, owned by CIBC, or just CIBC?
Should I wait for something much lower than 1.49% from cibc ? I’m currently on a 2.35% variable so I can switch anytime.
Hey Richie, Rates can always fall a bit more but that would be a risky bet given we’re presumably near the bottom of the business cycle and given the 5yr bond yield just climbed to 0.50%, a 6-month high: https://www.ratespy.com/5-year-canada-bond-yield
Also, in the event you’re already a CIBC mortgage customer, the 1.49% rate might not apply to you. Confirm with the bank to be sure.
Yes. I can confirm this is true as I applied for it last week. It was worth the 15K breaking penalty. Crazy deal!
why wouldnt i recieve 1 % mortgage rate
Kim AM Biro, Good question. You tell us. 😉
Hi，could you please tell us how is this offer compared with 1.29% floating rate mortgage? Thanks
Hey Alex, CIBC’s special is fixed for four years and for that security you’ll pay 0.20% more on the rate upfront. Fixed rates also entail more prepayment penalty risk.
Any pointers on how to reduce switch penalties?
Tony,
Instead of a straight switch, go for a refi after maximizing your prepayment privileges. For example if your original mortgage principal was $400k and you can pay 20% penalty-free, then make a prepayment of $80k a few days before closing with the new lender.
If you time things right, you can make two prepayments without penalty. For example TD allows 15% prepayments every calendar year, so you could make one prepayment at the end of December, another on the first week of January before switching to a new mortgage.
If you don’t have available funds to make a prepayment, then try to get your bank to calculate the penalty as if you maxed out your prepayment privileges. You can point out to them that it’s less work for them vs. actually processing a prepayment and then a few days later paying out the rest of the mortgage.
To add to what Ralph said: be sure to ask your lender if it restricts prepayments before the discharge date. Some lenders, for example, do not allow prepayments to lower penalties within 30 days of discharge.
I am a “small” time landlord who is seriously thinking of switching my mortgage on rental property. Currently paying 3.05% for straight mortgage (3 years fixed) with TD with remaining 19 months to go. Penalty as of Nov is about 2400.
Here is the deal:
Scotia: Interest rate: 1.7 for variable 5 years (mortgage) and prime + 1 for HELOC (3.45%).
Cashback: None
Transfer fees : yes up to $800.00
Subdivision of HELOC accounts: Yes for 4 accounts (2 each for mortgage and HELOC)
Mortgage payment can come from any account
CIBC on other hand is offering 1.88% variable for 4 years and HELOC of 2.45 (promo rate) until June 2021 and thereafter HELOC will be prime + 0.5.
Cashback: 1K plus will cover transfer fees (will check with bank max amount to be covered)
Subdividing HELOC account? No. Only 1 HELOC account
Mortgage payment to come from CIBC account ONLY
Breaking Mortgage, portability, financing; both banks have same computation
Goal is to save money from interest rates and hopefully down the road use HELOC money for down payment for another rental property.
Please help, I am perplexed. Thank you in advanced.
Don’t get in a variable rate… look where rates are locked in a fixed or end up like people in the us did in 2008
@Cookies, I don’t follow. Rates fell significantly post-2008, meaning variables did better.
@ jeck
I have about 14 months remaining with scotia and they told me my penalty to break 3 year fix mortgage will be about 8k.
I think your 2400 penalty is not true as I have ascertained this many time with scotia in branch and over the phone on scotia mortgage helpline.
I am considering the blend and extend option of scotia bank for my mortgage and factoring my rate of 3.05% with the current rate of 2.00% and penalty of $8000, scotia bank is quoting me rate of 2.35 for 5 year mortgage.
Thank you Sam and Cookie. I have written confirmation from a mortgage specialist that I will only pay 2400 should I break it. About a month or so, a specialist told me over the phone that I have to pay around 4K if I break my mortgage. I will let you know how this will turn out.
I am now deciding where to transfer my mortgage whether to Scotia or CIBC. I may have to wait until next week — other big banks may follow the lead of HSBC.
Rob,
Can you explain your criteria for updating the “best discretionary rate”? For CIBC’s 4yr fixed, RateSpy still shows 1.89%.
Hey Ralph,
We wrote about it on the site last week. It’s an unpublished rate, is short term and there are certain details missing so we couldn’t post it. The bank won’t publicly acknowledge it.
Spy, great website!
If you had to pick between HSBC’s 1.29% variable (includes -0.5% discount from the published 1.34%) and CIBC’s 1.49% 4 years fixed purely for best rate (will not break mortgage and ignoring prepayment options), which would you chose right now?
Can the BoC be trusted to keep rates the same till 2023?
Thanks Paul, Someone would save a couple hundred bucks a year per $100,000 of mortgage by taking that variable over the 1.49% fixed (ignoring everything else but the contractual interest cost).
I just don’t love the risk/reward of variable here for the average borrower (at rates like this). Of course, rates could fall more and inflation could continue undershooting the 2% target for years. But — for most people — the benefit of being right about that would be less than the cost of being wrong.
The BoC could wait until September 2023 to start hiking and with just 75 bps of tightening one could still lose money in that cheaper variable — albeit, not much money.
In practice, however, many other things factor into term selection besides basic interest expense: https://www.ratespy.com/fixed-or-variable-rate-the-decision-checklist-02223752
When comparing HSBC variable rate and this one, need keep in mind that cibc also offer cash back on this offer. And I don’t see anywhere HSBC currently offer any cash back. That cash back alone would help cover some costs.
Thanks Vic, HSBC may offer cash back in certain cases, like with switches. Best to inquire with them to confirm though.
Hi Spy!
Thanks for the great content. Is there anything out there that’s better than this for uninsured mortgage for 30 years? I don’t see anything in the rate list but there might be something unpublished so I asked. Lots of good offers with high ratio though.
Thanks Garry, Not that we’re aware of.
is this also good for a 30yr amortizaiton ? The 1.49% for 4 yrs?
The CIBC four years fixed rates is 1.49% is this rates is only for new mortgage or can refinance as well
When I asked it was good for refinances too but not for 30 year amortizations.
This promo was good until Christmas. If you didn’t start an application by then, you won’t be able to get it now as I was told by a CIBC mortgage specialist.