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CMHC to Introduce Variable Rate Mortgage-Backed Securities

OTTAWA, Ontario, September 2, 2003 — "Variable Rate Mortgage-Backed Securities (VRMBS), Canada Mortgage and Housing Corporation's (CMHC) newest housing finance initiative to improve the supply of low-cost mortgage funds in Canada, will be introduced in September", says Karen Kinsley, President, Canada Mortgage and Housing.

"Canadian home buyers will benefit because the VRMBS will provide the mortgage market with an additional competitive source of funds which will help lower mortgage financing costs," added Ms. Kinsley.

The introduction of VRMBS will allow Canadian financial institutions to pool variable rate mortgages into Mortgage-Backed Securities for the first time. This will facilitate the funding of variable rate mortgages which represent a large proportion of the Canadian mortgage market. Once pooled into VRMBS, they may be sold to the Canada Housing Trust for purposes of issuing Canada Mortgage Bonds.

Canada Mortgage Bonds provide investors with an attractive fixed income investment opportunity featuring: semi-annual interest payments; repayment of principal at maturity and; a full timely payment guarantee by CMHC on behalf of the Government of Canada. Canada Mortgage Bonds, CMHC's internationally recognized program provides Canadians with both an attractive and secure investment opportunity, and an important new source of funds to further enhance the efficiency of the secondary mortgage market, and ultimately lowering the cost of mortgage financing in Canada.

CMHC pioneered the development of the Canadian secondary mortgage market with NHA Mortgage Backed Securities in 1987. Since the introduction of the Canada Mortgage Bonds Program in June of 2001, CMHC has provided its timely payment guarantee for over $24 billion of bonds issued by the Canada Housing Trust. The innovative program received international awards in two consecutive years (2001 and 2002) for "Non-dollar bloc Deal of the Year" and "Canadian Dollar Deal of the Year" from Euromoney.

For further information please contact:

Karen Kinsley
(613) 748-2186

A fact sheet detailing the introduction of Variable Rate Mortgage-Backed Securities follows.

Canada Mortgage Bonds

Media Fact Sheet New 985 NHA MBS Pool Variable Rate Mortgage Backed Security (VRMBS)