Report

Fiscal Implications of the Government’s Purchase of Canada Mortgage Bonds

Oct 30, 2025

This report provides an overview of the fiscal impact of the Government’s commitment to purchase up to $30 billion annually in Canada Mortgage Bonds.

Highlights

In the 2023 Fall Economic Statement, the Government announced it would purchase up to $30 billion in Canada Mortgage Bonds (CMBs) each year, starting in early 2024.
To date, the Government has purchased $50.8 billion in CMBs, which represents 48.1 per cent of the total amount of CMBs issued since February 2024.
The yield spread between CMBs and Government of Canada bonds of similar maturity, has narrowed since the Government’s purchases started, reducing its expected revenue relative to what would have been anticipated based on historical spreads.
Increased borrowing to fund these purchases could raise the Government’s overall borrowing costs, while relying on short-term debt to finance longer-term assets exposes it to higher short-term interest rates, which if realized could also reduce or offset net revenues from the purchased CMBs.
It is uncertain whether the Government’s annual maximum of $30 billion in purchases could be increased without affecting the functioning of the CMB market, which investors use as a risk management tool.