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The Government of Canada today announced additional measures to protect the long-term stability of Canada’s housing market. These measures will increase the amount of money available to Canadians for mortgages and make mortgage insurance more transparent, understandable and affordable.

These measures, and the limits recently announced for government guaranteed mortgages, will protect the Canadian housing market from a US-style housing bubble and encourage individuals and families to save through home ownership.

Increased sources of funding: The Government of Canada is taking steps to benefit consumers by increasing the volume of funding for mortgages available to Canadian banks and other mortgage lenders. As Canada Mortgage and Housing Corporation (CMHC) recently announced, the Canada Mortgage Bond (CMB) program will be expanded to include a CMB with a 10-year maturity to interest new investors who are seeking assets beyond the current five-year term.

The planned CMB program expansion is in addition to the record $12.5 billion CMB issue in June, which funded an estimated 64,000 mortgages and brought the total outstanding amount for the CMB program to roughly $136 billion.

The Government of Canada is also proposing changes to clarify the tax treatment of existing innovative capital structures used by Canadian financial institutions to raise funds. Changes announced today will make Canadian regulations more consistent with rules in other jurisdictions that operate under the guidance of the Basel Committee on Banking Supervision. Further details are contained in the attached backgrounder.

Consumer measures: The Government also intends to introduce two new consumer measures around mortgage insurance. The first measure will enhance disclosure to consumers about the characteristics of mortgage insurance. While lenders are already required to itemize the cost of mortgage insurance as part of their disclosure to borrowers, the new measure will set out additional, mandated disclosures to help consumers better understand the mortgage insurance transaction.

The second measure will ensure that Canadian consumers are charged no more for an insured mortgage than the true cost of obtaining that mortgage. This new measure will guard against practices alleged to occur in other jurisdictions whereby insurance premiums charged to borrowers could be artificially inflated.