The new opportunity for Canadians to save for their first home has seen great interest
Canada’s largest lender says interest in the newly introduced First Home Savings Account (FHSA) has been very strong.
First announced by the federal Department of Finance a year ago, the FHSA account is a tax-free option for those building up wealth to buy their first home and RBC started making it available in April.
Similar to a TFSA, the account allows investors to hold a broad range of investments including mutual funds, publicly traded securities, government and corporate bonds, and guaranteed investment certificates.
Flora Do, vice president of RBC’s Investments Transformation & Client Segments, Personal Banking & Investments, says the early uptake has been phenomenal.
"We're seeing amazing interest in this new tax-free account, particularly among younger Canadians who are building a down payment for their first home," she said, adding that RBC’s FHSA has attracted “tens of thousands” of customers since its launch.
More than half (56%) of RBC FHSAs are held by clients aged 25 to 34; 20% of FHSA holders are aged 35 to 44; 18% are aged 18 to 24; and 6% are aged 45+ and more than one quarter are already contributing regularly to their accounts.
The account has an annual savings limit of $8,000 and contribution room only starts to accumulate after an FHSA has been opened. Unused contribution room only carries forward to the next calendar year.
Recently, two financial planning experts shared their view of the FHSA with Wealth Professional and said it is more than just a homeownership gamechanger.
Popular securities
RBC says that to date, ETFs and stocks are the most popular securities being held in its customers’ accounts, but it has now also made mutual funds available as an investing option in addition to a variety of GICs through RBC Direct Investing.
"It's wonderful to see Canadians seizing the opportunity to open and contribute to FHSAs right away, so they can bring their dream of home ownership closer to reality and also take advantage of the tax deduction before the end of the 2023 calendar year," noted Do.
