The market for Canada Mortgage Bonds (CMBs) has jumped to over $189 billion today from less than $10 billion in 2001, and foreigners love ‘em.
Foreign investors love CMBs so much, they bought 37% of last week’s issuance. (25-30% is normal.)
This, in turn, saves Canadians some basis points off their mortgage rates. It’s tough to quantify how much higher spreads would be without foreign buying, but let’s call it 10 basis points for conversation. Ten basis points on a $200,000 mortgage buys about 80 coffees a year—not enough to retire on, but enough to say: “Thanks Europe & Asia.”