The Canada Mortgage and Housing Corporation is expanding the number of insured mortgages it is willing to buy from banks to give the banks more freedom to lend out more money to consumers and businesses and keep the economy humming.
The taxpayer-funded agency, which backstops the vast majority of Canada's housing market by insuring the loans that finance them, announced earlier this month it was willing to take up to $50 billion worth of loans off of banks' books.
On Thursday, the CMHC announced it would expand that mortgage-buying program to $150 billion.
"This action will expand the stable funding available to banks and mortgage lenders in order to ensure continued lending to Canadian consumers and businesses," the agency said in a statement.
Moving loans from banks to the CMHC helps the banks' books and allows them to free up cash that they can lend out to consumers and businesses while the COVID-19 pandemic is hitting them hard and threatening the overall economy.
Canada's big banks have promised interest rate relief for up to six months to Canadian borrowers struggling to make their payments, but the CBC has reported that the fine print of those programs make it so that the deferred interest must be paid back at some point, which makes the loan longer and more expensive.
Banks flooded by requests for mortgage relief
Canada's big banks are being flooded by requests for payment relief by borrowers — to the tune of 213,000 requests so far, Bloomberg reported Thursday.
The head of the CMHC, Evan Siddall, is asking mortgage holders to not overload the system in order to make sure any relief goes to those who need it most.
In terms of the agency's mortgage-buying program, CMHC says all of the pools of mortgages that would be transferred are already insured by the government anyway, so there's no additional risk to taxpayers from the transaction.
Ottawa implemented a similar program during the financial crisis. At that time, the CMHC ended up taking over about $69 billion worth of mortgages, about half the amount they were willing to take on.