Canada Mortgage and Housing Corporation is increasing the number of insured mortgages it is willing to buy from banks to give banks more freedom to lend more money to consumers and businesses and to grow the business economy.
The taxpayer-funded agency, which supports the vast majority of the Canadian housing market by securing the loans that finance it, announced earlier this month that it is ready to take out up to $ 50 billion in loans. in bank books.
CMHC announced on Thursday that it would expand the mortgage purchase program to $ 150 billion.
“This action will increase the stable funding available to banks and mortgage lenders to ensure continued lending to Canadian consumers and businesses,” the agency said in a statement.
Transferring loans from banks to CMHC helps bank books and frees up money they can lend to consumers and businesses as the COVID-19 pandemic hits them hard and threatens the economy in general.
The major Canadian banks have promised interest rate relief for up to six months Canadian borrowers who are having trouble making their payments, but CBC reported as the fine print of these programs means that deferred interest has to be paid back at some point, making the loan longer and more expensive.
CMHC says that all mortgage pools that would be transferred are already insured by the government anyway, so there is no additional risk to the taxpayers of the transaction.
Ottawa implemented a similar program during the financial crisis. At that time, the CMHC ended up taking over approximately $ 69 billion in mortgages, about half the amount they were willing to accept.