Definition: The “Canadas,” or Government of Canada (GoC) bonds, refer to debt securities issued by the Canadian federal government. These bonds are considered one of the safest investments available in Canada because they are backed by the full credit and taxing power of the federal government.
Types of GoC bonds
- Treasury bills: Short-term government securities that mature in less than a year, ideal for investors seeking liquidity.
- Canada Savings Bonds: Previously available to individuals, these were phased out in 2017. They offered fixed returns and were guaranteed by the federal government.
- Marketable bonds: Long-term government bonds with maturities ranging from 2 to 30 years, often bought by institutions seeking stability.
Significance of GoC bonds in the mortgage market
GoC bonds influence mortgage rates, especially fixed rates, as they serve as a benchmark for lenders. Changes in the yield of long-term bonds impact the cost of mortgage financing, often causing lenders to adjust fixed mortgage rates accordingly.
Last modified: November 5, 2024