Initial reactions to new first-time buyer initiative
REP
It was a welcome announcement from the BC government, but it has its critics
“It’s great that the BC Government is helping first-time homebuyers but I am wondering what this program is doing to address the increasing house prices. If this program enables even more people to get into the market, will that not just increase demand?” one commenter wrote in the REP forum. “Won’t an increase in demand with no corresponding increase in supply just drive home prices up even further? When are programs going to be put into place to address the supply issue?”
The BC Government has announced today the BC Home Owner Mortgage and Equity Partnership Program.
Under the program, the BC government will match down payment funds of eligible first-time homebuyers up to $37,500 with a 25-year term second mortgage.
As an example, a buyer purchasing a $500,000 home can put down 5% using $12,500 of their own funds and $12,500 from the BC Home Partnership Program.
No payments are required and no interest will accrue until the sixth year of the mortgage term.
Many have already commended the government for taking action and helping first-time buyers over the initial hurdle of homeownership.
“People need a partner in scraping together that first down payment,” Premier Christy Clark, who announced the program, told a news conference Thursday.
“A home is a place where you live and raise your family and start your life,” she said of the three-year program that starts next month.
The program will be paid for in part by a 15-per-cent foreign homebuyers’ tax and a luxury tax on homes priced at over $2 million, Clark said.
New Democrat David Eby, the Opposition’s housing critic, said the plan will saddle first-time homebuyers with more debt when the government should be building affordable housing on provincial land.
Eby said the government’s move appears to reward real estate developers who are major financial contributors to B.C.’s Liberal party.
“We really think the government should be looking at protecting the interests of first-time homebuyers so they don’t have to take on so much debt to get into the housing market because they are already swimming in debt,” he said. “It’s bizarre to me they are going the other way and the only explanation I can think of is they want to reward their donors.”
To be eligible, first-time buyers must be pre-approved for an insured high-ratio mortgage for at least 80 per cent of the home’s purchase price.
The government provided an example of the loan program on a $750,000 home where the buyer has saved $52,500 for a down payment.
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