The Future of CMBs: A Major Question Mark for the Mortgage Market

Few Canadians understand how crucial the Canada Mortgage Bond (CMB) program is to facilitating more mortgage options and lower rates.

Given all the government-imposed costs and limits on the CMB and #NHA MBS# programs since the #GFC# (wow, that's a lot of acronyms for one sentence), we wonder if even housing policymakers fully grasp its importance.

"The only way our small lenders compete is to have an edge on pricing," a major bank aggregator (mortgage investor) told us. "If anything prices outside where big banks price, they don’t have a chance." The government-backed CMB program is a crucial source of this low-cost funding, especially in the mortgage broker channel.

Despite its importance, the government is looking to end the Canada Mortgage Bond (CMB) system as we know it...and replace it with something else.

That "something else" has been a huge question mark because the Department of Finance has released so little information thus far—besides this consultation document.

After reading the document, National Bank Financial (NBF) called the proposal "one of the most material changes ever proposed for Canada’s domestic bond market."

The government's initiative begs all sorts of questions. Among them:

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