Bank of Canada Now Buying 10-year CMBs
The Bank of Canada announced yesterday that effective immediately, the Bank will expand the Canada Mortgage-Backed securities (CMBs, which are government-guaranteed) it can purchase in the primary market to include 10-year fixed-rate bond issues. In 2018, The Bank expanded the assets it acquires to 5-year fixed and floating CMBs. The Bank held $517 million of these 5-year CMBs as of November 30, 2019.
This move by the BoC should improve liquidity, reducing yields on 10-year CMBs, possibly lowering 10-year fixed rates for mortgage borrowers. Governor Poloz supports efforts to extend the duration of mortgages.
First-Time Homebuyers Incentive Plan Flops
Only about 3,000 applicants were approved for the Liberals’ First-Time Home Buyer Incentive (FTHBI) in 2019. That’s just $55 million in funding, a less-than-stellar start given its $1.25-billion three-year target. (This information is according to attendees at the TD Securities’ Financial Services Conference where CMHC made comments.)