Sept. 24 (Bloomberg) -- A C$125 billion ($116.4 billion) Canadian government program to buy mortgages from banks should continue because it would be “premature” to end it, the head of the Canadian Bankers Association said.

“This is a useful backup mechanism,” Nancy Hughes Anthony, chief executive officer of the association, said today in an interview. “It would be premature to cancel it at this point until we really see that we’re out of the woods.”

Finance Minister Jim Flaherty plans to extend the mortgage backstop plan, the Globe and Mail reported today, citing unidentified people. The program was introduced in October 2008 and Canada Mortgage and Housing Corp., which conducts the transactions, has not scheduled any auctions beyond one held Sept. 21.

Hughes Anthony said she doesn’t have confirmation that the program will be extended, though her group has pushed for a renewal. Since the program began, banks have sold C$64 billion of mortgages to the government, the newspaper said.

“The take-up has declined on that program for a variety of reasons, including the positive news that credit markets are starting to ease,” she said.

Chisholm Pothier, a spokesman for Flaherty, declined to comment when contacted by Bloomberg News.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net

Last Updated: September 24, 2009 10:01 EDT