"CMHC cools mortgage market with new cap for banks"
CMHC cools mortgage market with new cap for banks
http://www.cbc.ca/news/business/story/2013/08/06/business-mortgage-banks.html
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Canada Mortgage and Housing Corp. is putting a cap on the amount of mortgage-backed securities sold by banks that it is willing to guarantee.
A spokesperson with CMHC confirmed media reports Monday that the national housing agency will, effective immediately, limit banks and other mortgage lenders to $350 million worth of new mortgage-backed securities per month. The decision comes in the wake of "unexpected demand" for the guarantees, a spokeswoman for CMHC said in an emailed statement.
Under the National Housing Act Mortgage-Backed Securities (NHA MBS) program, banks have been able to securitize large portions of the mortgages they carry on their books. Because those securities are backed by CMHC, not the banks themselves, they're able to go out and lend that freed-up money to new homebuyers at lower prices, which adds fuel to Canada's housing fire.
Earlier this year, Ottawa announced it would limit the amount of those mortgage-backed securities that it would guarantee to $85 billion this year. That's a rise from from $76 billion in 2012.
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