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CMHC on Friday tried to buy up to $7 billion of variable rate mortgages from the banks as part of the federal governments efforts to provide liquidity to the market.  The shocker was they were only offered $2.3 Billion!This means of course that the banks are saying that they did not need the liquidity and preferred to hold on to their mortgages.Just FOUR short weeks ago that same iniative sold $8 Billion.  The banks either are preferring to hold the mortgages on their balance sheets OR they are able to sell them into the open market “like the olden days”, either way this is a good sign of things to come.Final note on this was also the price that variable rates were sold at were also better then in the past which would suggest that the cost of funds for the lenders on variable rates are improving.As a caution here I don’t anticipate that this will result in the lenders giving a break right away to consumers by passing on this additional savings to you.

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1. Greg Williamson – Blog » More Good News on Banks' Liquidity — January 14, 2011 @ 7:43 pm

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