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Has Federal Government Built a “Bridge to Nowhere” for 1st-Time Home Buyer?


Under Mortgage

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July 10th, 2019

Criticism is piling up for the federal government’s First-Time Home Buyer Incentive, set to kick off this September.

Economic researchers, realtors and mortgage experts have all questioned the usefulness of the program, one that sees the government fork over up to 10 percent for a downpayment on a home in exchange for a correspondent equity share of the property.

Now add website RateSpy.com to the list of critics. The mortgage-rate-comparison website has published a blunt dismissal of the program, which the Justin Trudeau-led Liberals unveiled this spring with the 2019 federal budget.

“It appears our government has built a bridge to nowhere for first-time buyers. No one needs it. Few will want it,” a RateSpy blog post reads.

As others have noted, part of that has to do with the income and mortgage caps built into the scheme. To qualify, households can’t earn more than $120,000 annually, and the maximum mortgage they can take on is limited to four times that.

RateSpy pegs that maximum purchase price at about $565,000, which is well below the average selling price in Canada’s most expensive markets.

“Heck, they might as well call it the ‘First Time Studio Condo Buyer Incentive’ in Toronto and Vancouver,” RateSpy quips.

Also, the RateSpy post suggests that a borrower earning $60,000 annually with a 5 percent downpayment can afford a home priced at $269,000 with an insured mortgage. However, a homebuyer taking part in the initiative would be limited to $253,000.

“As much as we hate to say it, this program looks like little more than vote candy, a program designed to do little, but appear as if the government is doing a lot,” RateSpy says.

“If the Liberals lose power in October, so might this program.”

Is Canada’s First-Time Home Buyer Incentive a “Bridge to Nowhere”? by Josh Sherman | Livabl

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