Canadian Imperial Bank of Commerce Chief Executive Officer Victor Dodig said the accommodations his bank is making for variable-rate mortgage holders who’ve seen their borrowing costs spike are “sustainable for the foreseeable future.”
(Bloomberg) — Canadian Imperial Bank of Commerce Chief Executive Officer Victor Dodig said the accommodations his bank is making for variable-rate mortgage holders who’ve seen their borrowing costs spike are “sustainable for the foreseeable future.”
At the end of its most recent quarter, CIBC had about C$52 billion ($39 billion) of variable-rate mortgages with monthly payments that weren’t covering even the interest portions of the loans. The bank was allowing borrowers to extend amortization periods to make up for it.
Such accommodations — a response to one of the most aggressive rate-hiking campaigns in the Bank of Canada’s history — can continue because most borrowers have significant equity in their homes and built up extra savings during the pandemic, Dodig said. Canadian regulations also required many homeowners who borrowed years ago to qualify at today’s higher rates, meaning they have the ability to make higher payments, he said.
“Our clients are making rational decisions,” Dodig said in an interview. “They’re either adjusting their payments, or they may be extending their amortization. For those that are renewing, they’re renewing on a shorter-term basis because they believe that interest rates may decrease.”
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