Critics of the federal First-Time Home Buyer Incentive say it’s too narrow
.jpg)
As Canadians enjoyed the Labour Day holiday, a new government scheme was officially launched that aims to help more people get on the housing ladder.
Many younger Canadians have struggled to afford their own home and a rising share of millennials are looking to more affordable options such as the recreational homes market.
But the First-Time Home Buyer Incentive may not be the panacea for potential new entrants into Canada’s housing market that Justin Trudeau and his ministers hope.
Critics say that it will not make a widespread difference to the ability of first-time homebuyers to afford to follow their homeownership dreams.
With the program’s requirements for household earnings of a maximum $120,000 and a mortgage-to-income ratio capped at 4 times household income, the top-end of the homes that the scheme will help to buy is far short of the $826K average home price in Vancouver or $982K in Toronto.
“It’s a very narrowly-focused program,” Royal LePage President Phil Soper told Bloomberg. “It’s just not a big enough slot of the market to move it.”
100K borrowers or 5K?
CMHC, which is administering the program, estimates that it could help 100,000 first-time homebuyers but Mortgage Professionals Canada thinks the figure could be as low as 5,000 as potential buyers are dissuaded by giving up equity in their new home and mortgage insurance requirements.
“The government says it wants to make homeownership more affordable and accessible, but its actions say otherwise,” MPC chief economist Will Dunning told Bloomberg. “The proposals “to improve access are likely to have only small positive effects.”
The First-Time Home Buyer Incentive has launched and you can now apply! For more info: https://t.co/QxeXIcQKsc #FTHBI pic.twitter.com/zu4nPD6fBD
— CMHC (@CMHC_ca) September 2, 2019
