Lenders used 55% of fed mortgage support

... . . . Related Content. . .. Condos have come to dominate the downtown Toronto skyline. .. . . Buzzworthy Today . . . . The Google CEO's powerful inner circle.. . Defend your data: 5 online security don'ts.. . What your Starbucks habit really costs you.. . Is it up to Kim Kardashian to save Sears?.. . Which nation's businesspeople are most corrupt?.. . How a monkish Apple engineer became a billionaire.. ... . . Canadian mortgage lenders took up just over half of the backup money the federal government made available during the recession, a new report says. Ottawa launched the Insured Mortgage Purchase Program in 2008 to buy government-backed mortgages from banks, insurance companies and other lenders so they could go on making loans to homebuyers and offset the impact of the recession. Initially set at $25 billion, it was boosted twice, to $125 billion. But only $69 billion or 55 per cent was drawn down under the program, Central Mortgage and Housing Corp. said in a report released Thursday. CMHC, a federal agency, ran the program. The limited use of the money may have been because there was no shortage of cash available to lenders to re-loan to home buyers, the government suggested in 2010. The purchase of the mortgages did not affect the deficit because the government had an offsetting assets, the bundles of mortgages it bought, the Department of Finance said. The mortgages were already backed by the government through CMHC, so there was no additional risk. The sellers went through a competitive process to ensure the rate of return on the purchased mortgages was higher than the government's cost of borrowing. There would be no cost to taxpayers because "the IMPP will earn a modest rate of return for the government with no additional risk," the Finance website said. "The program was instrumental in safeguarding Canada’s economy during a time of severe economic stress," CMHC said in its report, the Canadian Housing Observer. Now, however, the fear is that the Canadian housing market is in danger of becoming a bubble that could collapse if the European crisis gets really bad. And from expanding the mortgage market, the government has taken steps to tighten the market. Based on 2010 data, the CMHC report says housing-related spending accounted for more than a fifth of Canada's gross domestic product, or about $330 billion in 2010, up 7.1 per cent from $308 billion in 2009. The report also looks at impact of seniors on the housing market as their share of the population is forecast to rise to almost 24 per cent in by 2036 from about 14 per cent, and the increasing role of condominiums in the market. Condominiums accounted for nearly one-third of urban housing starts in 2010, up from 29 per cent in 2009 and 25 per cent in 2001, the report said. "Over half of all starts in Vancouver, 48 per cent in Montreal and 45 per cent in Toronto were intended for condominium tenure," it said