Variable-rate offerings have remained stable despite the Bank of Canada's rate increases
Canadian Imperial Bank of Commerce is confident in the strength of its mortgage portfolio even as it remains vigilant for potential vulnerabilities, according to chief risk officer Shawn Beber.
“We’re very comfortable with where things are currently,” Beber said. “[If] things get more stressed, then you could see higher losses than [anticipated] but that’s not the base case scenario that we are looking at.”
Over half of CIBC’s new mortgages since July last year were variable-rate, but only their interest has increased alongside the Bank of Canada’s rate hikes, with monthly payments remaining steady.
“That could lead to a higher amount of outstanding balance at renewal, but in terms of the performance right now, it’s not changing the monthly payment. As we look into the future, that can be a stress and we watch for that carefully,” Beber said.
Read more: CIBC profits fall in second quarter
The average variable rate (2.4%) across Canada is on an upward trend, but is still below pre-pandemic levels, while the average five-year fixed mortgage rate is currently at 3.69%, Ratehub.ca data showed.
Fortunately, CIBC is buttressed against “a much softer growth market” for mortgages, said Laura Dottori-Attanasio, the bank’s head of Canadian personal and business banking.
“If the market is more difficult, we will adjust our pace of investment. When it turns around, we will accelerate that pace of investment,” added Victor Dodig, president and CEO of CIBC.
