I was under the (apparently mistaken) impression that a HELOC worked like a variable-rate mortgage, in that the prime rate fluctuates but the offset from the prime rate is a constant.
It is a variable rate but the lender is free to adjust the discount rate unilaterally. Remember that all LOCs, including HELOCs are callable loans, they provide one to you at their discretion. They can even demand full repayment on the spot if they wanted to. This is a last resort thing and hasn't happened in Canada but they could if they needed to. They can even reduce your credit limit as you pay it down, which is effectively slowly closing your LOC if they deemed you a credit risk.
https://www.hoyes.com/blog/think-twice-before-you-get-a-home-equity-line-of-credit/
They can change the rate anytime without giving you a reason, and they can also call the loan at anytime. This is in the contract you signed when you got the HELOC. Only thing you can is try to negotiate with them or shop around with different banks.
You can try asking for a rate reversal and/or reduction. You'd need to speak with an imperial advisor if you're with cibc. Also, it would help if you bring over assets to their side if you have anything outside. We have P+0% and it hasn't changed in the last few years.
My guess would be because they can and they want more profits.
Yes. The bank is raising the rate bc they can. HELOC is not a locked loan.
I was under the (apparently mistaken) impression that a HELOC worked like a variable-rate mortgage, in that the prime rate fluctuates but the offset from the prime rate is a constant.
It is a variable rate but the lender is free to adjust the discount rate unilaterally. Remember that all LOCs, including HELOCs are callable loans, they provide one to you at their discretion. They can even demand full repayment on the spot if they wanted to. This is a last resort thing and hasn't happened in Canada but they could if they needed to. They can even reduce your credit limit as you pay it down, which is effectively slowly closing your LOC if they deemed you a credit risk. https://www.hoyes.com/blog/think-twice-before-you-get-a-home-equity-line-of-credit/
You are at the mercy of the bank when you use a HELOC. They can even call it in & have been known to if they think your ratio is too tight.
They can change the rate anytime without giving you a reason, and they can also call the loan at anytime. This is in the contract you signed when you got the HELOC. Only thing you can is try to negotiate with them or shop around with different banks.
Probably because they think your risk went up
They're hoping you'll just pay it rather than find another bank to borrow from. You can start shopping around if you want.
Which bank?
My guess is CIBC. There have been several posts in the past little while of CIBC doing this.
Have you missed payments at all?
Nope. I've been paying it down as aggressively as I can.
You can try asking for a rate reversal and/or reduction. You'd need to speak with an imperial advisor if you're with cibc. Also, it would help if you bring over assets to their side if you have anything outside. We have P+0% and it hasn't changed in the last few years.
What does it say in the loan agreement you signed?
Call you home branch mortgage specialist and ask if they can request it to be lowered - you might get lucky. My HELOC at Scotia is p+0.25
Got approval yesterday for prime rate
Good discussion
You could always call and ask? Isn’t it based on the federal funds rate, which can change every 6 weeks