CIBC has started sending notices to its customers that it will be increasing its interest rates for personal lines of credit (PLC). The increases vary depending on the account, but some have seen a hike of up to four percentage points on top of the bank’s prime rate.
CIBC’s current prime rate was raised from 6.7% to 6.95% on June 8. This means those originally with a prime +1% interest rate would see a heart-rending total interest rate of 11.95% on their unsecured line of credit.
The move comes as the Bank of Canada, against expectations, hiked interest rates for the first time since January. The central added another 25 basis points, bringing the benchmark rate up to 4.75%.
The new interest rate marks the end of the pause in raising interest rates and also breaks a record for the highest the key interest rate has been since 2001. BoC has raised the rate a total of nine times since March 2022 in an attempt to quash inflation. The figure has gone up a total of 4.5 percentage points.
And yet inflation seems to be stickier than it should be.
Following the central bank’s aggressive rate hikes, commercial banks have raised their prime rate — coming from 2.7% to today’s 6.95%.
According to its letters to customers, CIBC’s new interest rate will take effect beginning July 17, 2023.
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