Starting Monday eligible Canadians can buy into the Canada Mortgage and Housing Corporation's new shared equity mortgages for first-time buyers.
Jean-Yves Duclos serves as Minister of Families and Social Development and is responsible for the Canadian Mortgage and Housing Corporation. Duclos announced the First-Time Home Buyers incentive program in Richmond Hill, ON Wednesday morning. The program will come into effect September 2.
“We understand and feel how big a struggle it is for younger, middle-class families, in particular, to achieve their dream of first-time home ownership” said Duclos, “Home prices have increased more rapidly than incomes and wages.”
Duclos says the plan will help reduce the cost and risk of a mortgage for home ownership and will benefit 100,000 families over the next three years by dropping the costs of monthly mortgage payments by nearly $300 and a total of $3400 annually.
Under the plan, families purchasing a home worth more than $500,000 sell an equity stake in the home to the government worth 10%.
The minister responsible for housing says the program helps first timers get ahead, calling it a stepping stone for middle-class families entering the housing market.
Broker Marnie Bennett, however, expresses doubts on the program’s effectiveness; Bennett calls the program complicated and ‘like a lottery’.
“This is a windfall for the government, not for the consumer,” said Bennett. “If they’re that cash strapped, that they can't afford 200 dollars a month, they shouldn’t be in the business of buying a house,” she said; referring to the prospective monthly savings on mortgage payments.
“You're much better off to save more money, and what are you saving at the end of the day? $150 to $200 a month, meanwhile they could benefit because prices are going up 10 to 15% every year,” said Bennett. “As a past prime minister said, I don’t want the government in my bed. I don’t want them in my home; so I wouldn’t want them as a shared partner.”
Emma Awe and her partner Rebecca Seltzer believe the program might help them buy their first home. Awe and Seltzer recently moved to Ottawa from Montreal; where they say rent is half the price monthly.
“The amount of money we're spending on renting right now, the amount of money we're losing on a monthly basis,” said Awe.
“If the government would make it easier for me to have that capital initially then at the end of the day, if I still get back more like ethically I don’t have any problem giving that back to the government,” said Seltzer.
