Credit continues to flow from banks to Canadian businesses and households at a strong pace. Bank business credit rose 13.2% Y/Y in December 2008 and credit growth to households accelerated to 12.4% Y/Y.

On the household side, mortgages saw a strong advance

in December, rising at 1.8% M/M and lifting mortgage lending 11.6% Y/Y. Although banks' on-balance sheet mortgages contracted slightly (-0.7% M/M), banks' mortgage

lending through National Housing Act Mortgage-Backed

Securities (NHA MBS) expanded by 7.6% M/M or a whopping 55.4% Y/Y. For reference, NHA MBS bundle mortgages are insured against borrower default by the Canadian Mortgage and Housing Corporation (CMHC), a crown-corporation of the federal government. Over December 2008, outstanding NHA MBS expanded significantly and, from CMHC data, banks increased their share of outstanding issues under the program. In November 2008, the federal government allowed CMHC to purchase up to $75 billion NHA MBS from banks in order to increase liquidity in the financial system.

The continuing expansion of mortgage credit demonstrates that this program is indeed boosting homebuyers' access to funds.