The federal government is launching a revised purchase program of insured mortgages — a move that will provide Canada’s mortgage market with liquidity.
Under the revised Insured Mortgage Purchase Program (IMPP), the government will purchase up to $50 billion of insured mortgage pools through the Canada Mortgage and Housing Corporation (CMHC), the CMHC said in a release on Monday.
The move will provide stable funding to banks and mortgage lenders to ensure continued lending to Canadian consumers and businesses, the CMHC said. The IMPP also provided lenders with liquidity during the 2008-09 financial crisis.
As insured mortgage pools in Canada already carry government of Canada backing, there’s no additional risk to taxpayers, the release said. The purchased insured mortgage pools will earn a rate of return for the government that’s above its borrowing cost, it said.
Details of the purchase terms will be provided to lenders later this week.
The Bank of Canada has also announced it will adjust its market liquidity operations to maintain market functioning and credit availability.