Canada Mortgage-Backed Securities Market May Cool on New Rules
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Housing measures from Morneau may curb origination of bonds
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MBS sales have grown alongside Canada’s hot housing market
Efforts to cool Canadian home prices could trickle down to the C$440 billion ($335 billion) market for debt backed by insured residential mortgages.
Stricter rules for banks lending to home buyers and higher requirements for mortgage insurance could reduce mortgage origination in Canada and in turn lower sales of mortgage-backed securities, according to investors and analysts.
“If it slows down the housing market, it’s going to slow down the quantity of mortgages that will end up being on banks’ books, which means there’s a smaller pool that’s available to be securitized,” Jean-Francois Pepin, co-chief investment officer at Addenda Capital Inc., which manages C$28 billion, said by phone. His Montreal-based firm invests in mortgage-backed securities…
Canada Mortgage-Backed Securities Market May Cool on New Rules
