With a third of its mortgage portfolio having variable rates, CIBC saw its amortizations soar as of the fourth quarter.
Over a quarter (26%) of CIBC’s residential mortgage portfolio now has an effective amortization of 35 years or longer, the bank reported as part of its Q4 earnings release. That’s just slightly more than TD Bank, which similarly reported that 25.2% of its mortgage portfolio now has amortizations in excess of 35 years, Canadian Mortgage Trends reported.
“As interest rates rise, most of our variable rate mortgages with fixed payments are impacted through an extension of amortization until renewal,” the bank noted in its report. “At renewal, the mortgage reverts to the original amortization schedule, which may require additional payments.”
CIBC has said it’s been proactively reaching out to borrowers, in addition to “a number of programs and initiatives” deployed throughout the year to “help our clients through a rising rate environment.”
The bank added that $28 billion worth of mortgages will be up for renewal in the next 12 months—$20 billion of which are fixed-rate mortgages and $8 billion worth with a variable rate.
“At this time, we still only see a small, less than $20 million of mortgage balances with clients we see as being at higher risk from a credit perspective and whose LTVs are in excess of 70%,” said Chief Risk Officer Frank Guse. “These ratios are very stable quarter-over-quarter. We actively monitor our portfolios and proactively reach out to clients who are at high risk of financial stress.”
Less than 1% of CIBC’s uninsured mortgage portfolio has both a FICO score of 650 or less and a loan-to-value (LTV) over 75%.
“Overall, our mortgage portfolio is well positioned and we do not expect to see material losses,” Guse added.
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