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CMHC Announces Changes to its Securitization Programs

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CMHC Announces Changes to its Securitization Programs

Canada Mortgage and Housing Corporation is announcing a change to the guarantee fees it charges issuers as well as the annual limits for new guarantees for 2016 for both National Housing Act Mortgage-Backed Securities (NHA MBS) and Canada Mortgage Bonds (CMB).

“Guarantee fees and annual issuance limits allow CMHC to facilitate the supply of reliable mortgage funding in Canada while managing the Government’s exposure to the housing sector” stated Wojo Zielonka, Senior Vice-President, Capital Markets. “The revised fee structure is intended to encourage the development of private market funding alternatives by narrowing the funding cost difference between government sponsored and private market funding sources.”

CMHC guarantees the timely payment of interest and principal for NHA MBS and for CMB enabling approved financial institutions to pool eligible mortgages and transform them into marketable securities that can be sold to investors. These programs support financial stability by providing reliable mortgage funding at reasonable cost throughout the business cycle while fostering competition by supporting access to smaller lenders that cannot readily access other forms of funding.

Guarantee Fees

CMHC charges issuers a fee to compensate for the guarantee it provides. For the period ending June 30, 2016, guarantee fees under the NHA MBS and CMB programs will be kept at current levels.

Effective July 1, 2016, guarantee fees under the NHA MBS and CMB programs will be adjusted from current levels according to the following:

  • The threshold for an issuer’s annual NHA MBS guarantees will be increased from current $6 billion to $7.5 billion. There will be no change to NHA MBS guarantee fees below the threshold.
  • An increase from 60 bps to 80 bps for 5-year NHA MBS for an issuer’s annual NHA MBS guarantees in excess of $7.5 billion;
  • A decrease from 40 bps to 30 bps for 5-year CMB;
  • All NHA MBS sold into CMB series issued after July 1, 2016 as original or reinvestment assets will be subject to NHA MBS guarantee fees

The increase in the threshold reflects that all NHA MBS sold into CMB issued after July 1, 2016 will be subject to NHA MBS guarantee fees. The threshold accommodates a reasonable use of NHA MBS for funding. The higher guarantee fee for issuances beyond the threshold is designed to discourage excessive use of NHA MBS for liquidity or funding purposes.

Effective July 1, 2016, the guarantee fee for CMB will be restructured and will account for the fact that guaranteed NHA MBS will be sold into CMB. CMHC does not expect the change in fee structure to impact the timing and volume of its CMB issuances.

For 2016, the following guarantee fees will apply:

Upfront Guarantee Fee
Guarantee fee Prior to July 1, 2016 As of July 1, 2016
5-year NHA MBS 30 bps
(annual guarantees <= $6.0B)
30 bps
(annual guarantees <= $7.5B)
5-year NHA MBS 60 bps
(annual guarantees > $6.0B)
80 bps
(annual guarantees > $7.5B)
5-year CMB 40 bps 30 bps + market NHA MBS fee

*bps = basis point; 1 bps = 0.01%

Guarantee Limits for 2016

Under the National Housing Act, the Minister of Finance has the authority to specify the terms and conditions under which CMHC may guarantee payment of any or all of the principal and interest, in respect of securities issued on the basis of housing loans. For 2016, the Minister of Finance has authorized CMHC to provide up to $105 billion (2015 – $80 billion) for new guarantees of market NHA MBS and up to $40 billion (2015 – $40 billion) of new guarantees for CMB.

The increase in the annual guarantee limit for NHA MBS is to accommodate the use of guaranteed NHA MBS used for CMB starting July 1, 2016. This limit excludes NHA MBS issuance as original or reinvestment assets for CMB series issued on or before June 30, 2016. These limits are separate and distinct from the $600 billion limit on mortgage insurance-in-force.

As Canada’s authority on housing, CMHC contributes to the stability of the housing market and financial system, provides support for Canadians in housing need and offers objective housing research and information to Canadian governments, consumers and the housing industry.

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Information on this release:

Charles Sauriol
CMHC Media Relations


  • CMHC’s securitization programs facilitate the supply of reliable funding for mortgage lending in Canada and foster competition within the mortgage industry.
  • CMHC’s securitization activities are operated on a commercial basis and do not receive Parliamentary appropriations. These programs contribute to CMHC’s Net Income and help to improve the Government’s fiscal position.
  • Canadian lenders continue to be supported by a diverse and stable funding base including deposits from customers and capital markets funding such as securitization, the Canadian Covered Bond Program and other corporate debt.

National Housing Act Mortgage-Backed Securities (NHA MBS)

  • Issuers participate in the NHA MBS program by issuing NHA MBS backed by pools of loans. Loans in a pool must be insured against borrower default under the National Housing Act or by an Approved Private Mortgage Insurer.
  • The NHA MBS Program provides a mechanism to convert the supply of private investor funds to loans at reasonable rates of interest and provides a more efficient secondary mortgage market.

Canada Mortgage Bonds (CMB)

  • CMBs are issued through a special purpose trust known as the Canada Housing Trust (CHT). The Trust sells non-amortizing Canada Mortgage Bonds to investors and uses the proceeds to purchase mortgages packaged in newly issued NHA MBS.
  • The CMB program was introduced in June 2001. Benefits of the program include:
    • Investment opportunities into Canadian residential mortgages
    • Facilitates access to affordable mortgage financing for Canadians
    • Promotes competition in the residential mortgage market