The Financial Post reports in its Friday, May 10, edition that Bank of Canada Governor Stephen Poloz wants to grow a market for private mortgage- backed securities in Canada, but demand for such investments appears to be scarce.
The Post's Geoff Zochodne writes that on Monday Mr. Poloz said it would be "helpful" to both borrowers and lenders to see such a market develop here. Private mortgage-backed securities (MBS) may lack a government guarantee, but they could act as "a much more flexible source of longer- term funding" for uninsured mortgages, especially those issued by smaller financial institutions, Mr. Poloz said.
"This is an increasingly important point because the market share for uninsured mortgages is increasing, and they can't be used in Canada Mortgage Bonds)," Mr. Poloz said.
Canada Mortgage and Housing Corp.'s Canada Housing Trust has been buying insured mortgages from financial institutions and using them in Canada Mortgage Bonds for nearly 20 years, the governor noted. More than $230-billion of that government-backed MBS is outstanding, he said, or about 15 per cent of total mortgage debt.
Mortgage-backed securities are home loans lashed together and sold as a bundle.
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